Fed Chair Jerome Powell says criminal probe threatens central bank independence

Federal Reserve Chairman Jerome Powell said Sunday that he is the subject of a federal criminal investigation tied to the $2.5 billion renovation of the central bank’s Washington headquarters, warning that the case represents an unprecedented threat to the independence of U.S. monetary policy.

In a public video statement, Powell said the investigation stems not from wrongdoing, but from political pressure following the Federal Reserve’s refusal to rapidly cut interest rates despite repeated demands from President Donald Trump.

“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on evidence and economic conditions rather than political preference,” Powell said, adding that he would not be intimidated into altering policy decisions.

According to Powell, the Department of Justice issued grand jury subpoenas on Friday related to his June testimony before the Senate Banking Committee, where he addressed the scope and cost of the renovation of historic Federal Reserve buildings. Powell insisted that the Fed had fully informed Congress throughout the multi-year project and described the investigation as a “pretext.”

“This is about whether the Federal Reserve can continue to do its job without fear,” he said. “Monetary policy must be guided by data, not threats.”

Market reaction was swift, with U.S. stock futures declining following Powell’s remarks, reflecting investor concern over political interference in the central bank.

The investigation was first reported by The New York Times and is being overseen by the U.S. Attorney’s Office for the District of Columbia, led by Jeanine Pirro, a Trump appointee. A person familiar with the probe said it centers on the renovation project and Powell’s congressional testimony.

President Trump, speaking to NBC News on Sunday, said he was unaware of the investigation but again criticized Powell’s leadership, calling him ineffective both on interest rates and the building project. Trump has repeatedly argued that rates remain “far too high” and has openly stated his intention to replace Powell when his term as chair expires in May.

Political reaction on Capitol Hill was sharply divided. Republican Sen. Thom Tillis of North Carolina said he would block any Trump nominee to replace Powell, as well as other Federal Reserve board appointments, until the matter is resolved.

“If there were any doubt left about efforts to undermine the Fed’s independence, this should erase it,” Tillis said.

Democratic leaders echoed those concerns. Senate Minority Leader Chuck Schumer accused the administration of weaponizing federal law enforcement to pressure an independent institution, while Sen. Elizabeth Warren warned that the investigation risks turning the central bank into a political tool.

Powell, who has served under four administrations from both parties, said he intends to continue in his role without compromise.

“No one is above the law,” he said. “But public service sometimes requires standing firm when institutions themselves are under threat.”