Federal Reserve Chair Jerome Powell has disclosed that the US Justice Department has launched a criminal investigation into him over renovations to the Fed's historic office buildings, escalating tensions between the White House and the central bank to unprecedented levels. Powell claims the investigation represents political intimidation aimed at undermining the Fed's independence in setting monetary policy.

Criminal Investigation Details

According to a New York Times report, the US Attorney's Office for the District of Columbia has opened the criminal probe focusing on the renovation project and whether Powell lied to Congress about its scope. In a public statement released Sunday, Powell argued that he is being threatened because the Fed has set interest rates "based on our best assessment of what will serve the public, rather than following the preferences of the president."

Powell emphasized the broader implications of the investigation, stating: "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."

Bipartisan Congressional Opposition

The investigation has triggered strong bipartisan criticism from lawmakers who view it as a threat to Federal Reserve independence. North Carolina Republican Senator Thom Tillis, a member of the Senate Banking Committee, has taken a firm stance against the administration's actions.

Tillis stated in an official statement: "I will oppose the confirmation of any nominee for the Fed—including the upcoming Fed Chair vacancy—until this legal matter is fully resolved." He added that the move removes any doubt about efforts to end Federal Reserve independence.

Senator Elizabeth Warren characterized the investigation as part of Trump's objective to remove Powell and "complete his corrupt takeover of our central bank." She wrote on social media that Trump "is abusing the law like a wannabe dictator, so the Fed serves him and his billionaire friends."

Market Analyst Concerns

Financial experts have expressed alarm about the potential economic consequences of political pressure on the Federal Reserve. Jason Furman, former top economic adviser to President Obama and current Harvard University professor, praised Powell as a "true statesman" for resisting White House pressure.

Brian Jacobsen, chief economist at Annex Wealth Management, suggests Powell might choose to remain as a Federal Reserve governor after his term as Chair ends in May 2026, noting: "His term as Chair is up in May, but his term as a governor isn't up until January 2028. With the political pressure on the Fed, he may choose to stay on as a governor out of spite."

Economic Implications

Market strategists warn that aggressive tactics against Fed leadership could produce unintended economic consequences. Karl Schamotta, Chief Market Strategist at Corpay, cautioned that such pressure might trigger a surge in long-term bond yields, leading to higher borrowing costs throughout the US economy.

Schamotta noted that these tactics could backfire by driving up inflation expectations and weakening the dollar's status as a safe-haven asset. He described the revelations as "a dramatic escalation in the administration's effort to kick the legs out from under the Fed" that could unleash consequences contrary to stated presidential aims.

Political Context

The investigation represents an escalation in ongoing tensions between the administration and Federal Reserve leadership. A senior House Republican, speaking anonymously to POLITICO, criticized the criminal probe, stating the administration is "setting a standard they cannot achieve themselves and will haunt us all for a generation."

Senate Minority Leader Chuck Schumer characterized the investigation as typical bullying behavior, writing on social media: "Anyone who is independent and doesn't just fall in line behind Trump gets investigated. Jay Powell and the Fed aren't the reason Trump's economy and his poll numbers are in the toilet."

President Donald Trump has denied any involvement in the Justice Department's investigation targeting Federal Reserve Chair Jerome Powell, stating he was unaware of the subpoenas issued over the weekend. The investigation centers on Powell's June testimony before the Senate regarding renovation costs at Federal Reserve office buildings.

Investigation Details and Trump's Response

Trump told NBC News he had no knowledge of the Justice Department's actions, saying "I don't know anything about it." However, he continued his criticism of Powell's leadership, particularly regarding interest rate policies and their economic impact.

The subpoenas are tied to Powell's testimony about Federal Reserve office building renovation expenses. Powell confirmed that the Justice Department had raised the possibility of criminal action, describing this as an unprecedented step for a Federal Reserve chair.

Powell Cites Political Pressure

Powell responded to the investigation by highlighting what he characterized as sustained pressure from the White House. In a video message, he stated that while no one is above the law, including the Federal Reserve chair, the unprecedented action should be viewed in the broader context of administration threats and ongoing pressure.

Powell emphasized that the Federal Reserve sets interest rates based on economic conditions rather than political preferences. He suggested the possibility of criminal charges appeared linked to the central bank's independent stance on monetary policy.

Congressional Response

The investigation has prompted bipartisan criticism from lawmakers concerned about Federal Reserve independence:

• Senator Thom Tillis (R-NC): Announced he would block confirmations of Trump nominees for the Federal Reserve until the matter is resolved
• Senator Elizabeth Warren (D-MA): Accused the administration of misusing federal authority to influence the central bank

Senator Tillis wrote that any remaining doubt about Trump Administration advisers actively pushing to end Federal Reserve independence should now be eliminated. Warren characterized the actions as abuse of law to serve Trump and his associates.

Agency Responses and Background

The White House declined to comment, directing questions to the Justice Department. A department spokesperson told NBC News that the agency does not comment on specific cases but prioritizes investigations into potential misuse of public funds.

The Federal Reserve operates independently of taxpayer funding, generating revenue through service fees, loans, and investment income. The US attorney's office in Washington is handling the investigation but has declined to comment.

Trump has previously called for legal action against various political figures, including James Comey, Adam Schiff, and New York Attorney General Letitia James. Powell's current term as Fed chair concludes in May, while his Board of Governors seat extends through 2028.