Criminal probe opened into Fed Chair Jerome Powell
12th Jan. 2026
Federal prosecutors have opened a criminal investigation into Federal Reserve chair Jerome Powell. As a result, the development has raised fresh concerns about political pressure on the US central bank and its independence. In a video released on Sunday, Powell said the US Justice Department had served subpoenas linked to testimony that he gave before a Senate committee regarding costly renovations to Federal Reserve buildings. Moreover, he warned that prosecutors had threatened a potential criminal indictment.
Powell described the investigation as “unprecedented.” He said that he believed it followed repeated clashes with President Donald Trump, who has publicly criticized the Fed chair for refusing to lower interest rates despite sustained pressure from the White House. Consequently, the episode has triggered renewed debate over whether monetary policy decisions will remain insulated from partisan influence.
Powell alleges political pressure over interest rates
According to Powell, the probe relates to statements he made about the renovation of the Fed’s historic Eccles and Constitution Avenue buildings. While the Justice Department has not publicly confirmed the investigation. Nevertheless, Powell argued that the broader context cannot be ignored.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation,” Powell said. He added that although he respects accountability and the rule of law, “no one, certainly not the chair of the Federal Reserve, is above the law”.
Meanwhile, Trump told a leading news site that he did not know about the investigation. However, he repeated long-standing criticisms of Powell, saying: “He’s certainly not very good at the Fed, and he’s not very good at building buildings.”
The renovation project, which marks the first major overhaul of the Fed’s headquarters since the 1930s, includes asbestos removal, lead mitigation, and modernization work. Although the Fed has said that the upgrades will reduce long-term operating costs. On the same side, Trump has argued that expenses have ballooned to $3.1bn, significantly higher than the Fed’s $2.5bn estimate.
Market reaction after the announcement of the criminal probe
The investigation was first reported by the New York Times, that being overseen by the US Attorney’s office for the District of Columbia. Importantly, it comes as Trump is expected to announce Powell’s successor by the end of the month. It’s a timeline that has sharpened political tensions.
Republican Senator Thom Tillis of North Carolina said that he would oppose any Fed nominations until the legal matter is resolved. “If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” he said. Democratic Senator Elizabeth Warren echoed those concerns and accused Trump of removing Powell permanently and “install another sock puppet to complete his corrupt takeover of America’s central bank”.
Financial markets reacted swiftly. As uncertainty rose, investors turned to safe-haven assets. Gold prices climbed by 1.4%, while silver surged more than 5% before easing slightly. Taken together, the investigation into Powell, alongside earlier failed prosecutions of Trump’s political adversaries, has raised fresh questions about the independence of key US institutions. As Powell’s term nears its end, the outcome of this probe may shape not only the future leadership of the Federal Reserve but also global confidence in the credibility of US monetary policy.
Web Resources on the Criminal Probe on Powell
1. CNN.com: Federal prosecutors open criminal investigation into the Fed and Jerome Powell
2. Independent.co.uk: Justice department opens ‘unprecedented’ criminal probe into Fed chair Jerome Powell
3. NYTimes.com: Federal Prosecutors Open Investigation Into Fed Chair Powell
4. Politico.com: DOJ opens probe into Fed’s Powell, drawing backlash from lawmakers
5. Federalreserve.gov: Statement from Federal Reserve Chair Jerome H. Powell