The head of the American Federal Reserve, Jerome Powell, sees himself as the target of politically motivated judicial investigations. In an unusual statement, the central bank chief revealed that the Justice Department had served grand jury subpoenas to the Federal Reserve and threatened criminal charges against Powell.
The American judiciary is therefore investigating whether the Fed chairman lied at a hearing before the Senate Banking Committee. The hearing discussed, among other things, a multi-year project to renovate historic Federal Reserve office buildings.
The construction project hit the headlines due to cost overruns. The cost to renovate two historic buildings on the National Mall has risen to $2.5 billion. Powell had denied before Congress that luxury features were the reason.
It’s about the independence of the central bank, warns Powell
Powell said he has great respect for the rule of law and accountability in democracy. He is not above the law. “But this unprecedented action should be seen in the broader context of this administration’s threats and continued pressure,” Powell said. “This new threat has nothing to do with what I said last June or with the renovation of the Federal Reserve buildings. It is also not about the oversight role of Congress. These are subterfuges. The threat of criminal charges is a result of the Federal Reserve setting interest rates based on our best estimate of what serves the public good – rather than following the President’s preferences.”
The core issue is whether the Fed will continue to be able to set interest rate policy based on evidence and economic conditions – or whether monetary policy will instead be driven by political pressure or intimidation.
President Donald Trump denied to NBC News on Sunday that he was privy to the Justice Department’s investigation. Asked whether the subpoenas were related to his desire for lower interest rates, Trump replied: “No. I wouldn’t even think of doing it that way. What should pressure him is the fact that interest rates are way too high. That’s the only pressure he has.”
Trump launched a campaign against the Fed
The Federal Reserve and its head Powell have long been the target of a presidential campaign. Trump is trying to bring the central bank into line with regular attacks after refused key interest rate cuts, which often result in personal insults. Last year, Trump repeatedly threatened to fire Powell, citing problems related to the Federal Reserve’s building renovations.
In the summer, Trump visited the construction site with White House staff and appeared with Powell in front of reporters. There was a small verbal argument.
During his first term in office, Trump made Powell himself head of the Fed, on the advice of then-Treasury Secretary Steven Mnuchin. When the Fed did not follow Trump’s desired monetary policy ideas, attacks began, which reached their first climax in August 2019, when Trump asked on Twitter who was America’s bigger enemy – “Jay Powell or China’s Xi”. He later insulted the Fed chief as a “bonehead.” In April 2025 he followed up: Powell was “Mr. Too Late”, a “major loser”, his “firing couldn’t come fast enough” – and in the Oval Office, Trump boasted that if he wanted to get rid of Powell, he would be “almost” gone.
Trump had also examined the legal options for firing Powell and options for disempowering the Federal Reserve. Powell’s term as head of the Federal Reserve ends in May of this year. The White House is currently conducting interviews with potential successors.
Some signs suggest that White House economic policy chief Kevin Hassett has the best chance of being nominated as Trump’s successor. It is unclear whether Powell will retire completely at the end of his term as head of the Fed. His contract as ordinary central bank governor runs until January 2028.
Even Republicans in the Senate don’t believe in independent investigations
Meanwhile, resistance is building in the Senate against the actions of the White House and the Justice Department. Republican Senator Thom Tillis, a member of the Senate Banking Committee, is threatening to block any nomination. His statement said: “If there was any doubt as to whether advisers within the Trump administration were actively working to end the independence of the Federal Reserve, then there should be no longer any doubt. Now the independence and credibility of the Justice Department itself are in question.” The North Carolina politician continued: “I will decline to confirm any Fed nominee, including the upcoming Fed vacancy, until this legal matter is fully resolved.”
Jeanine Pirro initiated the investigation against Powell. She was nominated by Trump in May to be the district attorney for the District of Columbia, which includes the capital, and confirmed by the Senate in August. The 74-year-old lawyer with many years of experience as a prosecutor has been a television judge for Fox News since 2008 and has close political ties to Trump.
She expressed doubts about the legality of Trump’s election defeat against Democratic candidate Joe Biden, defended the storming of the Capitol as an exercise in freedom of assembly and freedom of expression and wrote a book in which Trump is portrayed as a victim of left-wing conspiracies.
