US prosecutors have initiated an inquiry that could result in a criminal indictment of the Federal Reserve, Chair Jerome Powell said Sunday, January 11, accusing the Trump administration of ramping up “threats and sustained pressure” over monetary policy.
In a video statement, Powell confirmed that the central bank received grand jury subpoenas on Friday, January 9, tied to his June testimony before the Senate regarding renovation expenses for Federal Reserve office buildings. He characterized the subpoenas as a “pretext,” linking them to months of escalating tensions with President Donald Trump, who has repeatedly faulted the Fed for not lowering interest rates more aggressively.
“The prospect of criminal charges stems from the Federal Reserve setting interest rates based on our best judgment of what serves the public interest, rather than complying with the President’s preferences,” Powell said. He described the move as “unprecedented” and part of a broader campaign of “threats and ongoing pressure” from the administration.
The inquiry comes as Trump has intensified his criticism of Powell since securing re-election, pressing for faster rate cuts in a break from long-standing norms safeguarding the Fed’s independence. The central bank is tasked with maintaining price stability and maximizing employment, primarily through adjustments to interest rates.
Trump told reporters he was unaware of the Justice Department’s investigation. “I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings,” the president said when asked about Powell.
Financial markets reacted uneasily when trading opened on Monday, January 12. The US dollar weakened against major currencies, benchmark 10-year Treasury yields fell, and gold prices climbed as investors sought safe-haven assets. Analysts warned that continued political interference could undermine investor confidence. ING strategist Francesco Pesole said market sentiment echoed the “sell America” mood seen during Trump’s earlier tariff disputes.
Lawmakers from both parties criticized the investigation, warning it threatened the Federal Reserve’s independence. Republican Senator Thom Tillis said the Justice Department’s credibility was at risk and pledged to block confirmation of any new Fed nominees “until this legal matter is fully resolved.” Senate Democratic Leader Chuck Schumer accused the administration of targeting those unwilling to “fall in line behind Trump,” calling the probe an attack on the institution itself.
Powell’s term as chair expires in May, and Trump has indicated he will select a successor based on their willingness to implement immediate rate cuts. The president has previously floated the idea of removing Powell but has instead focused criticism on cost overruns at the Fed’s Washington headquarters, where renovation estimates increased by roughly $600 million last year.
In July, Trump made an unexpected visit to the construction site, where he and Powell—both wearing hard hats—argued over the project’s cost in front of Federal Reserve staff.
