The US Department of Justice has opened a criminal investigation into Jerome Powell and the Federal Reserve, marking a sharp escalation in Donald Trump’s confrontation with the central bank.
Powell said on Friday that the Fed had been served with grand jury subpoenas, raising the prospect of a criminal indictment linked to his testimony before the Senate banking committee in June last year.
The investigation focuses on Powell’s comments to lawmakers about renovations to the Federal Reserve’s historic office buildings in Washington DC, and whether he misled Congress about the scale of the project.
According to the New York Times, the US attorney’s office in the District of Columbia has opened a criminal inquiry into the matter, examining Powell’s public statements and the Fed’s spending records.
Trump allies had spent months accusing the central bank of mismanaging the multibillion-dollar renovation programme. The president had repeatedly threatened legal action over the issue.
In a statement on Sunday, Powell said the threat of criminal charges was linked to the Fed’s refusal to set interest rates according to the president’s wishes.
He said the central bank had acted “based on our best assessment of what will serve the public”, rather than political pressure from the White House.
Trump has repeatedly criticised Powell for resisting calls to cut interest rates more aggressively and has sought to weaken the Fed’s long-established independence.
The administration has already placed a close ally of the president on the Fed’s board of governors and has attempted to remove Lisa Cook, a governor appointed by Joe Biden, citing unproven allegations of mortgage fraud.
The New York Times reported that the inquiry was approved in November by the US attorney Jeanine Pirro, citing officials briefed on the investigation.
In a further statement on Sunday evening, Powell said the issue went beyond his testimony to Congress.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether monetary policy will be directed by political pressure or intimidation,” he said.
Powell said he had served under four administrations, both Republican and Democratic, and had carried out his duties without political bias, focused on price stability and maximum employment.
“Public service sometimes requires standing firm in the face of threats,” he said, adding that he intended to continue in his role with integrity.
The White House declined to comment directly, referring questions to the Department of Justice, which did not respond immediately.
Powell was first appointed as chair of the Federal Reserve by Trump and later reappointed by Biden. He has held the position since 2018. His term as chair expires in May, though he can remain on the board of governors until 2028.
After the pandemic, inflation in the US rose to its highest level in decades, prompting the Fed to raise interest rates sharply in 2022 and 2023 in an effort to slow the economy.
Although the central bank had begun cutting rates by the time Trump returned to office last year, the president repeatedly urged faster reductions, arguing that lower borrowing costs would boost growth.
Fed officials became more cautious, citing uncertainty created by Trump’s economic policies, including the uneven rollout of wide-ranging tariffs. The central bank opted several times to hold rates steady, despite pressure from the White House.
Powell said on Sunday that he respected the rule of law and accountability, but warned that the investigation should be viewed in the context of sustained political pressure on the Fed.
“No one is above the law,” he said. “But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”
