The US Department of Justice has opened a criminal investigation into Federal Reserve chairman Jerome Powell, sharply escalating President Donald Trump’s long-running confrontation with the country’s central bank and raising serious questions about the future of its independence.
Powell said the justice department served the Federal Reserve with grand jury subpoenas on Friday, linked to his testimony before the Senate banking committee last June on renovation work at the Fed’s historic headquarters in Washington DC. The probe is examining whether Powell misled Congress about the scope and cost of the multi-billion-dollar project, according to reports.
In a strong public statement, Powell suggested the investigation was politically motivated, arguing that he was being targeted for refusing to bend to White House pressure on interest rates. “This is about whether the Federal Reserve can continue to set interest rates based on evidence and economic conditions, or whether monetary policy will be directed by political pressure or intimidation,” he said.
Trump has repeatedly criticised Powell for not cutting rates faster, despite public calls and behind-the-scenes pressure. While the Fed began easing rates last year, officials chose a cautious approach, citing uncertainty around inflation, trade policy and Trump’s sweeping tariff plans. The central bank has often opted to hold rates steady, frustrating the president.
Trump allies have for months accused the Fed of mismanaging the renovation project and had openly threatened legal action. The investigation includes a review of Powell’s public statements and Fed spending records.
The Trump administration has already moved to tighten its grip on the Fed, appointing a close presidential ally to the board of governors and attempting to remove Democratic-appointed governor Lisa Cook over unproven allegations.
Republican Senator Thom Tillis, a member of the Senate banking committee, warned that the probe undermines institutional independence. He said he would oppose confirmation of Powell’s successor, and any new Fed board nominees, until the matter is resolved.
Powell, first appointed by Trump in 2018 and reappointed by President Joe Biden, has said he respects the rule of law and accountability but called the investigation “unprecedented”. His term as Fed chair ends in May, though he can remain on the board until 2028.
“This moment must be seen in the broader context of ongoing pressure on the central bank,” Powell said, adding that he would continue to carry out his duties “without political fear or favour”.
