Federal prosecutors have opened a criminal investigation into Jerome Powell, the chair of the Federal Reserve, according to a statement he released on Sunday.
In a video message, Powell said the US Department of Justice served the Federal Reserve with subpoenas and warned of a potential criminal indictment tied to testimony he delivered to a Senate committee last year regarding renovation work at Fed buildings in Washington.
Powell described the investigation as “unprecedented” and suggested it was triggered by his refusal to lower interest rates despite repeated public pressure from US President Donald Trump.
Concerns Over Central Bank Independence
“This is about whether the Federal Reserve can continue setting interest rates based on economic evidence, or whether monetary policy will be shaped by political pressure or intimidation,” Powell said.
While stressing his respect for the rule of law, Powell argued the probe should be viewed in the context of what he described as sustained pressure from the administration over monetary policy.
The Justice Department and the White House did not immediately respond to requests for comment.
Trump Denies Knowledge of Investigation
Trump told NBC News on Sunday that he was unaware of the Justice Department’s actions.
“I don’t know anything about it,” he said, while criticizing Powell’s performance as Fed chair and his handling of the building renovation project.
The Federal Reserve is currently renovating its Eccles Building and the adjacent 1951 Constitution Avenue facility — the first major overhaul since their construction in the 1930s. The project includes health and safety upgrades such as asbestos and lead removal.
The Fed has said the renovations will reduce long-term operating costs, but Trump has repeatedly attacked the project, claiming it will cost $3.1bn — higher than the Fed’s estimate of $2.5bn.
Political Fallout Intensifies
If confirmed, the investigation would mark a sharp escalation in Trump’s long-running dispute with Powell, whom he appointed as Fed chair in 2017. Trump is expected to announce Powell’s successor by the end of the month.
Although the Federal Reserve cut interest rates three times in the second half of 2025, Trump has argued the reductions were insufficient and has blamed interest rates — and former president Joe Biden — for high inflation and living costs.
Critics warn that pressure to remove Powell risks undermining the Fed’s independence, a principle widely seen as essential to effective monetary policy.
Lawmakers Push Back
Republican Senator Thom Tillis, a member of the Senate Banking Committee, said he would oppose any Trump nominee to the Fed — including the next chair — until the legal matter is resolved.
“If there was any doubt that advisers within the Trump administration are trying to end the Fed’s independence, there should be none now,” Tillis said, adding that the credibility of the Justice Department was also at stake.
Democratic Senator Elizabeth Warren accused Trump of attempting to force Powell off the Fed board and replace him with a compliant successor.
Markets React as Probe Emerges
According to the New York Times, the investigation is being overseen by the US Attorney’s Office for the District of Columbia.
Financial markets showed signs of unease following the news. Gold prices rose 1.4 percent to $4,572.36 an ounce on Monday, briefly hitting a record high, while silver also reached a new peak before easing slightly.
April Larusse, head of investment specialists at Insight Investment, told the BBC that the Fed had not been inactive on interest rates and suggested political pressure on Powell was difficult to justify.
Pattern of Legal Battles
The probe into Powell follows other high-profile cases involving Trump’s Justice Department, including unsuccessful efforts to prosecute Fed Governor Lisa Cook and political figures such as former FBI director James Comey and New York Attorney General Letitia James. Courts later dismissed those cases, with the accused saying the charges were politically motivated.
As scrutiny of the Powell investigation grows, the case has reignited debate over the boundaries between politics, law enforcement and the independence of America’s central bank.