Federal prosecutors confirmed Sunday night that they have launched a criminal investigation into Federal Reserve Chairman Jerome Powell.
Powell said the investigation was the result of the Fed “setting interest rates based on its best assessment of what will serve the public, rather than following the wishes of President Donald Trump.”
“This is about whether the Fed can continue to set interest rates based on evidence and economic conditions, or whether monetary policy will instead become dictated by political pressure and intimidation,” he said in a video statement tweeted on the Fed’s X account.
“The Department of Justice has sent a grand jury subpoena to the Fed threatening criminal charges related to my testimony before the Senate Banking Committee last June,” Powell said Friday.
“That testimony was related in part to a multi-year project to renovate the historic Federal Reserve Office Building,” he said.
“I deeply respect the rule of law and accountability in our democracy. No one is above the law, certainly not the Chairman of the Federal Reserve, but this unprecedented action should be viewed in the broader context of the administration’s threats and continued pressure,” Powell said.
“No one is above the law, including, of course, the chairman of the Federal Reserve,” he said.
“However, this unprecedented action should be viewed in the broader context of the administration’s threats and continued pressure,” Powell said.
“This new threat is not about my testimony last June or about the Federal Reserve’s building renovations. It is not about Congress’s oversight role. The Fed has made every effort to keep Congress informed about its renovation plans through testimony and other disclosures. Those are pretexts.”
The New York Times first reported the investigation, citing officials briefed on the matter.
The investigation is being overseen by the U.S. Attorney’s Office for the District of Columbia, the newspaper said.
The office will be led by U.S. Attorney Jeanine Pirro, a former New York state prosecutor and Fox News host who was appointed to the position by President Trump.
Since entering the White House in January 2025, President Trump has repeatedly criticized Powell for not allowing the Fed to lower interest rates as quickly as the president had requested.
The White House referred questions about the investigation to the Justice Department. CNBC has reached out to the Department of Justice for comment.
President Trump has made no secret of his intention to fire Powell as chairman after his term ends in May.
The two likely candidates are believed to be former Governor Kevin Warsh and current National Economic Council Director Kevin Hassett.
Sen. Thom Tillis, Republican of North Carolina and a member of the Senate Banking Committee, slammed the investigation into Mr. Powell and said he would oppose any nomination by Mr. Trump or any other Fed board nominee to replace Mr. Powell “until this legal matter is fully resolved.”
“If there was ever any doubt that advisers within the Trump administration were actively pushing for an end to the independence of the Federal Reserve, that doubt should now be gone,” Tillis said in a statement.
“The independence and credibility of the Department of Justice are now being called into question,” the senator said.
“President Trump is pursuing criminal charges against Mr. Powell in connection with his testimony to Congress regarding the Federal Reserve Headquarters renovation,” Brian Jacobsen, chief economic strategist at Annex Wealth Management, said in a note to clients on Sunday.
“Mr. Powell may protest with a sit-in. His term as speaker ends in May, but his term as governor does not end until January 2028,” Jacobesen wrote.
“Political pressure on the Fed could cause him to choose to stay in the Fed’s chair out of spite, which would deprive President Trump of the ability to stack the board with other appointees,” Jacobsen wrote. “Steven Millan’s term ends in January 2026, and that may be the only vacancy Trump can fill. It would be unconventional for Powell to stay, but everything is unconventional these days.”
President Trump nominated Powell to chair the Federal Reserve in 2017. He was confirmed in 2018.
But for nearly the entirety of Mr. Powell’s term, Mr. Trump has repeatedly sparred with the Fed chairman about interest rates.
President Trump has on various occasions called Fed officials “crazy” and once called Powell a golfer who can’t putt.
Those criticisms intensified during Trump’s second term, as he pressed central banks to cut interest rates for months before and after cutting rates by three quarterly percentage points for three straight quarters starting in September.
Meanwhile, President Trump has placed his hand-picked Mr. Millan on the Fed’s board and is trying to remove another Fed governor, Lisa Cook, over allegations of mortgage fraud. Mr. Cook denies those allegations.
The Supreme Court is scheduled to hear arguments in a lawsuit challenging Cook’s firing in late January.
—CNBC’s Jeff Cox and Garrett Downs contributed to this article
This is breaking news. Please refresh to check for updates.
