U.S. prosecutors have initiated a criminal investigation into Federal Reserve Chair Jerome Powell, highlighting a growing conflict regarding the independence of the central bank. In a video statement released on January 11, Powell confirmed that the Department of Justice is pursuing a criminal probe linked to his congressional testimony, which has now put the Federal Reserve in direct opposition to the executive branch.
The investigation focuses on Powell”s June 2025 testimony before the Senate Banking Committee, specifically concerning cost overruns related to a $2.5 billion renovation of the Fed”s historic headquarters in Washington, D.C. Powell indicated that the inquiry is examining whether he misled lawmakers regarding the renovation”s scope and expenses.
This investigation was prompted by a referral from Republican Representative Anna Paulina Luna, who accused Powell of providing false statements to Congress. In November, the U.S. attorney”s office for the District of Columbia authorized this investigation.
Powell contested the rationale behind the investigation, asserting that Congress had been kept informed through both his testimony and public disclosures. He characterized the investigation as a retaliatory measure against monetary policy decisions that diverged from Donald Trump“s demands for more aggressive interest rate cuts.
“This is about whether the Fed will continue to set interest rates based on evidence and economic conditions,” Powell stated, “or whether monetary policy will be directed by political pressure.”
Trump has frequently criticized Powell regarding interest rates and has openly questioned the scale of the renovation project. Allies of the former president have spent considerable time attacking the Fed”s management of the renovation, with Trump even alluding to potential legal actions.
The commencement of this investigation signals a significant escalation in the tensions between the White House and the Federal Reserve. The Trump administration has already sought to reshape the Fed”s leadership, appointing a close ally to the Board of Governors and attempting to remove Governor Lisa Cook over unsubstantiated allegations.
Attorney General Pam Bondi emphasized that the investigation aims to ensure accountability regarding the use of taxpayer funds. Trump, in an NBC interview, denied directing the investigation while reiterating his criticisms of Powell”s effectiveness.
The investigation has sparked backlash from both political parties. Republican Senator Thom Tillis warned that the probe threatens to undermine the Federal Reserve”s independence and stated he would oppose future Fed nominees until the issue is resolved. Powell, who has served under four different administrations, reaffirmed his commitment to remain in his role and continue fulfilling the Fed”s mandates of price stability and maximum employment.
“Public service sometimes requires standing firm,” he remarked, emphasizing the importance of the central bank remaining insulated from political pressures.
