Federal Reserve Chair Jerome Powell said Sunday that the U.S. Department of Justice is threatening him with criminal charges, a move he described as an attempt to intimidate the central bank into complying with President Donald Trump’s demands on interest rate policy. Powell revealed the probe in a video statement released by the Federal Reserve, warning that the investigation could determine whether monetary policy in the United States remains grounded in evidence or succumbs to political coercion.
“I have deep respect for the rule of law and for accountability in our democracy,” Powell said. “No one, certainly not the chair of the Federal Reserve, is above the law, but this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”
Powell said the Justice Department served the Federal Reserve with grand jury subpoenas on Friday related to his testimony before the Senate Banking Committee last June. That testimony concerned a multiyear project to renovate the Federal Reserve’s historic office buildings in Washington, D.C., a project that has become the stated focus of the criminal investigation.
But Powell rejected the premise that the probe is about the renovation itself, describing the stated justification as a pretext.
“It is not about my testimony last June or about the renovation of the Federal Reserve buildings,” Powell said. “It is not about Congress’ oversight role; the Fed, through testimony and other public disclosures, made every effort to keep Congress informed about the renovation project. Those are pretexts.”
Instead, Powell said the threat of criminal charges stems from the Federal Reserve’s refusal to alter interest rate policy at the president’s direction.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said. “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.”
Stock futures fell following Powell’s statement, reflecting investor concern about political interference in the central bank. Powell warned that the investigation’s outcome would shape the future independence of the Federal Reserve.
The probe is being overseen by the U.S. Attorney’s Office for the District of Columbia, according to reporting by the New York Times and CNBC. That office is led by U.S. Attorney Jeanine Pirro, a former Fox News host appointed by Trump. A person familiar with the investigation told CNBC that they would not dispute that the probe is related to the renovation project and Powell’s congressional testimony.
Trump publicly denied knowledge of the investigation while simultaneously criticizing Powell’s performance.
“I don’t know anything about it,” Trump told NBC News. “But he’s certainly not very good at the Fed, and he’s not very good at building buildings.”
The president has repeatedly attacked Powell since returning to office in January 2025, pressuring the central bank to cut interest rates more aggressively. The Federal Reserve cut rates three times last year, totaling 75 basis points, but Trump has continued to demand steeper reductions.
Powell has publicly attributed inflation pressures to the administration’s tariff policies.
“It’s really tariffs that are causing the most of the inflation overshoot,” Powell said last month following the central bank’s December 10 meeting.
Trump’s hostility toward Powell dates back to his first term, despite having nominated him to the Fed chair position in 2017. Trump has repeatedly insulted Powell and Fed officials, calling them “boneheads” and referring to Powell as a “moron.” In December, Trump said, “We’re thinking about bringing a suit against Powell for incompetence” in connection with the renovation project and added, “I would love to fire him.”
Powell’s term as Fed chair ends in May, though his term as a Fed governor runs through January 2028. Trump’s economic adviser Kevin Hassett and former Fed Governor Kevin Warsh are widely viewed as potential replacements. Analysts have suggested Powell could remain on the board beyond his chairmanship, a move that could limit Trump’s ability to reshape the Fed.
Lawmakers from both parties condemned the investigation as a threat to institutional independence. Sen. Thom Tillis, a Republican member of the Senate Banking Committee, said he would oppose any Fed nominations until the 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,” Tillis said. “It is now the independence and credibility of the Department of Justice that are in question.”
Democratic lawmakers were more explicit in their criticism. Sen. Chris Murphy said the probe represents a direct attack on democratic governance.
“This is an effort to create an autocratic state. It’s that plain,” Murphy said. “Trump is threatening to imprison the chairman of Federal Reserve simply because he won’t enact the rate policy Trump wants.”
Sen. Elizabeth Warren, a frequent critic of Powell’s interest rate decisions, also condemned the investigation and urged the Senate to block any Trump nominations to the Federal Reserve.
“As Donald Trump prepares to nominate a new Fed Chair, he wants to push Jerome Powell off the Fed Board for good and install another sock puppet to complete his corrupt takeover of America’s central bank,” Warren said. “Trump is abusing the authorities of the Department of Justice like a wannabe dictator so the Fed serves his interests, along with his billionaire friends.”
Public Citizen co-president Lisa Gilbert praised Powell’s refusal to submit to pressure and warned against misuse of prosecutorial power.
“The Department of Justice should serve the rule of law, not the vindictive instincts of an authoritarian president,” Gilbert said. “And it should never misuse its criminal enforcement powers to pursue pretextual prosecutions against the president’s political opponents or those who show a modicum of independence.”
Financial analysts warned the probe could destabilize U.S. markets. Krishna Guha of Evercore ISI said investors may reassess risk associated with U.S. assets.
“We expect the dollar, bonds and stocks to all fall in Monday trading in a sell-America trade,” Guha wrote. “Gold and other safe havens should rally.”
Powell, who said he has served under four administrations of both parties, framed the situation as a test of public service.
“Public service sometimes requires standing firm in the face of threats,” Powell said. “I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.”
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