WASHINGTON, United States
The U.S. Department of Justice has launched an unprecedented criminal investigation into Federal Reserve Chair Jerome Powell, a move that has sent shockwaves through financial markets and raised alarm across the political and economic spectrum over the independence of the central bank.
According to officials familiar with the matter, federal prosecutors have issued subpoenas related to Powell’s testimony before Congress concerning cost overruns tied to a massive renovation of the Federal Reserve’s headquarters in Washington. The project, which includes upgrades to the historic Marriner S. Eccles Building and adjacent facilities, has reportedly climbed to roughly $2.5 billion, far exceeding earlier estimates.
Powell confirmed that the Federal Reserve has received subpoenas and said the central bank is cooperating with the investigation. In a brief statement, he rejected any suggestion of wrongdoing, stressing that his testimony to lawmakers was accurate and provided in good faith. He also warned that the probe risks undermining the long-standing independence of the Federal Reserve, a principle viewed as critical to economic stability in the United States.
The investigation comes amid months of escalating tension between Powell and President Donald Trump, who has repeatedly criticized the Fed chair for keeping interest rates higher than the White House prefers. Trump has accused Powell of mismanaging the economy and has openly discussed replacing him before his term ends in 2026. While the president has denied directly ordering the probe, the timing has fueled accusations that the Justice Department is being used to apply political pressure on the central bank.
Sources say the investigation was authorized by the U.S. Attorney’s Office in Washington, led by Jeanine Pirro, and focuses on whether Powell misled Congress about the scope, cost, and oversight of the renovation project. No charges have been filed, and the inquiry remains in its early stages.
The response from economists, lawmakers, and global financial leaders was swift and sharply critical. Former Federal Reserve chairs from both Republican and Democratic administrations issued a rare joint statement expressing “full solidarity” with Powell and warning that criminally targeting a sitting Fed chair could set a dangerous precedent. They argued that politicizing monetary policy could weaken investor confidence, destabilize markets, and ultimately harm the U.S. economy.
Several Republican lawmakers also voiced concern, with some saying that disputes over Fed policy should be handled through oversight and legislation, not criminal investigations. Democratic leaders went further, calling the probe an abuse of power and a direct threat to the institutional safeguards designed to keep monetary policy free from political influence.
Financial markets reacted with caution. Stocks fluctuated following the news, while investors showed renewed interest in safe-haven assets amid fears that the credibility of the Federal Reserve could be at risk. Analysts said the long-term impact would depend on whether the investigation expands or leads to formal charges.
For now, Powell remains in his role and has vowed to continue carrying out the Fed’s mandate of controlling inflation and supporting employment. As the investigation unfolds, it is likely to remain a defining issue for U.S. economic governance, testing the boundaries between law enforcement, politics, and central bank independence.
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