US Federal Reserve Board Chairman Jerome Powell speaks throughout a information convention following a Federal Open Market Committee (FOMC) assembly in Washington, DC, on Dec. 10, 2025.
Saul Loeb | AFP | Getty Pictures
Federal prosecutors are conducting a prison investigation of Federal Reserve Chairman Jerome Powell targeted on the $2.5 billion renovation to the central financial institution’s headquarters in Washington, D.C., and his associated testimony to Congress, he mentioned on Sunday night.
Powell mentioned the probe is the results of longstanding frustration by President Donald Trump over the Fed’s refusal to chop rates of interest as shortly and as a lot because the president has demanded.
“The specter of prison prices is a consequence of the Federal Reserve setting rates of interest primarily based on our greatest evaluation of what’s going to serve the general public, moderately than following the preferences of the President,” Powell mentioned in a video assertion tweeted by the Fed’s X account.
The chairman warned that the result of the investigation will decide the way forward for the central financial institution’s choices.
“That is about whether or not the Fed will have the ability to proceed to set rates of interest primarily based on proof and financial circumstances — or whether or not as a substitute financial coverage will probably be directed by political stress or intimidation,” Powell mentioned.
Powell mentioned the Division of Justice on Friday served the Fed “with grand jury subpoenas threatening a prison indictment associated to my testimony earlier than the Senate Banking Committee final June.”
“That testimony involved, partly, a multi-year mission to renovate historic Federal Reserve workplace buildings,” he mentioned.
The specter of indictment, Powell mentioned, “will not be about my testimony final June or in regards to the renovation of the Federal Reserve buildings.”
U.S. President Donald Trump seems to be at Federal Reserve Chair Jerome Powell holding a doc throughout a tour of the Federal Reserve Board constructing, which is presently present process renovations, in Washington, D.C., U.S., July 24, 2025.
Kent Nishimura | Reuters
“It isn’t about Congress’s oversight function; the Fed, by testimony and different public disclosures, made each effort to maintain Congress knowledgeable in regards to the renovation mission,” he mentioned. “These are pretexts.”
“I’ve deep respect for the rule of legislation and for accountability in our democracy,” Powell mentioned in his assertion.
“Nobody, actually not the chair of the Federal Reserve, is above the legislation, however this unprecedented motion ought to be seen within the broader context of the administration’s threats and ongoing stress.”
“I’ve served on the Federal Reserve below 4 administrations, Republicans and Democrats alike,” Powell mentioned.
“In each case, I’ve carried out my duties with out political worry or favor, targeted solely on our mandate of worth stability and most employment,” he mentioned. “Public service generally requires standing agency within the face of threats. I’ll proceed to do the job the Senate confirmed me to do, with integrity and a dedication to serving the American individuals.”
The New York Instances first reported the probe, citing officers briefed on the matter.
Inventory futures fell on the heels of Powell’s assertion.
An individual accustomed to the investigation informed CNBC that they might not dispute the concept the probe of Powell is expounded to the constructing renovation and his testimony to Congress.
The investigation is being overseen by the U.S. Lawyer’s Workplace for the District of Columbia, in accordance with the newspaper.
That workplace is led by U.S. Lawyer Jeanine Pirro, a former New York state prosecutor and Fox Information host, who was appointed to her submit by Trump.
Trump, in an interview with NBC Information on Sunday night, mentioned, “I do not know something about it,” referring to the prison probe of Powell.
“However he is actually not superb on the Fed, and he is not superb at constructing buildings,” Trump informed the information outlet.
Trump has repeatedly blasted Powell for the Fed not slicing rates of interest as a lot and as shortly because the president has demanded since coming into the White Home in January 2025.
However the president informed NBC on Sunday that the DOJ’s subpoenas wouldn’t have something to do with rates of interest, in accordance with the outlet.
“No. I would not even consider doing it that means,” Trump mentioned. “What ought to stress him is the truth that charges are far too excessive. That is the one stress he is bought.”
U.S. President Donald Trump speaks to the media throughout a tour of the Federal Reserve Board constructing, which is presently present process renovations, in Washington, D.C., U.S., July 24, 2025.
Kent Nishimura | Reuters
A DOJ spokesperson, in an announcement to CNBC, with out saying the remark was about Powell, mentioned, “The Lawyer Basic has instructed her US Attorneys to prioritize investigating any abuse of taxpayer {dollars}.”
Trump has made no secret of his intention to take away Powell as chair after his time period expires in Could.
The 2 main contenders are believed to be former Fed Gov. Kevin Warsh and Kevin Hassett, the present director of the Nationwide Financial Council.
Sen. Thom Tillis, a North Carolina Republican and a member of the Senate Banking Committee, blasted the investigation of Powell and mentioned that he would oppose the nomination of Powell’s alternative by Trump, and every other Fed Board nominee, “till this authorized matter is absolutely resolved.”
“If there have been any remaining doubt whether or not advisers inside the Trump Administration are actively pushing to finish the independence of the Federal Reserve, there ought to now be none,” Tillis mentioned in an announcement.
“It’s now the independence and credibility of the Division of Justice which can be in query,” the senator mentioned.
Senate Minority Chief Chuck Schumer, a New York Democrat, mentioned Trump’s “assault on the Fed’s independence continues,” including that the president is threatening the power and stability of the U.S. financial system.
“That is the sort of bullying that we have all come to anticipate from Donald Trump and his cronies. Anybody who’s unbiased and would not simply fall in line behind Trump will get investigated,” he mentioned in an announcement. “Jay Powell and the Fed aren’t the rationale Trump’s financial system and his ballot numbers are in the bathroom. If he is in search of the one that induced that he ought to look within the mirror.”
Sen. Elizabeth Warren of Massachusetts, the rating Democrat on the Banking Committee, echoed Tillis.
“As Donald Trump prepares to appoint a brand new Fed Chair, he desires to push Jerome Powell off the Fed Board for good and set up one other sock puppet to finish his corrupt takeover of America’s central financial institution,” Warren mentioned in an announcement.
“Trump is abusing the authorities of the Division of Justice like a wannabe dictator so the Fed serves his pursuits, alongside along with his billionaire pals,” Warren mentioned.
“This Committee and the Senate shouldn’t transfer ahead with any Trump nominee for the Fed, together with Fed Chair.”
Brian Jacobsen, chief financial strategist at Annex Wealth Administration, in a word to purchasers on Sunday, wrote, “President Trump is attempting to carry prison prices in opposition to Powell associated to his testimony earlier than Congress in regards to the Fed’s headquarters renovation.”
“Powell might protest by staging a sit-in. His time period as Chair is up in Could, however his time period as a governor is not up till January 2028,” Jacobsen wrote.
“With the political stress on the Fed, he might select to remain on as a governor out of spite. It will deprive President Trump of the power to stack the board with one other appointee,” Jacobsen wrote. “Stephen Miran’s time period is up in January 2026 and which may be the one emptiness Trump will get to fill. It will be unconventional for Powell to remain on, however the whole lot lately is unconventional.”
Trump nominated Powell to the Fed chair place in 2017; he was confirmed in 2018.
However nearly from the onset of Powell’s time period, Trump has repeatedly badgered the Fed chair about rates of interest.
At numerous occasions, Trump has known as Fed officers “boneheads” and as soon as referred to Powell as a golfer who can not putt.
These criticisms intensified throughout Trump’s second time period, as he hectored the central financial institution to chop charges for months, even after it carried out three consecutive quarter-percentage-point reductions starting in September.
Throughout that point, Trump put in his handpicked selection, Miran, as a Fed governor and has sought to take away one other governor, Lisa Cook dinner, from the board over allegations that she dedicated mortgage fraud.
Cook dinner denies these claims, which have been made within the type of prison referrals to the DOJ by Federal Housing Finance Company Director Invoice Pulte, who has been an assault canine in opposition to perceived enemies of Trump, who appointed Pulte to his submit.
The Supreme Courtroom is ready to listen to arguments on a case difficult Cook dinner’s elimination later in January.
Krishna Guha, vice chairman of Evercore ISI and head of its International Coverage and Central Financial institution Technique Workforce, in a word to purchasers on the probe of Powell, mentioned, “We’re shocked by this deeply disturbing growth which got here out of the blue after a interval wherein tensions between Trump and the Fed gave the impression to be contained.”
“We anticipate the greenback, bonds and shares to all fall in Monday buying and selling in a sell-America commerce much like that in April final yr on the peak of the tariff shock and earlier menace to Powell’s place as Fed chair, with world traders making use of a better danger premium to US property,” Guha mentioned. “Gold and different secure havens ought to rally.”
— CNBC’s Jeff Cox, Eamon Javers, and Garrett Downs contributed to this text
