Federal Reserve Chair Jerome Powell said the Justice Department has issued grand jury subpoenas to the central bank and raised the possibility of criminal charges—a rare and serious development that has put the Fed’s independence back in focus for markets.
In a video posted Sunday, Powell said federal prosecutors are investigating his testimony before the Senate Banking Committee last June. That testimony concerned the Fed’s $2.5 billion renovation of its Washington headquarters.
Powell suggested the investigation is politically motivated, arguing it is retaliation for keeping interest rates higher than President Donald Trump wants. “The threat of criminal charges,” Powell said, “is a consequence of the Federal Reserve setting interest rates based on what we believe serves the public, rather than following the preferences of the President.”
Trump criticizes Powell, rejects rate connection
President Trump, speaking to NBC News, said he was unaware of the investigation but used the opportunity to criticize Powell’s leadership.
“I don’t know anything about it,” Trump said, “but he’s certainly not very good at the Fed, and he’s not very good at building buildings.”
When asked directly whether the subpoenas were intended to pressure Powell to cut interest rates, Trump denied any connection. “No. I wouldn’t even think of doing it that way,” he said, adding that the investigation had nothing to do with rate policy.
Political pressure builds on Capitol Hill
The investigation follows months of political fighting over the Fed’s renovation project. In July 2025, Rep. Anna Paulina Luna referred Powell to the Justice Department, alleging possible perjury and false statements related to his Senate testimony.
Republican Sen. Thom Tillis said he would block confirmations of future Federal Reserve nominees until the matter is resolved, warning that the situation now raises concerns about the Justice Department’s independence.
Democratic Sen. Elizabeth Warren took a much harder line, accusing Trump of using the DOJ to pressure the central bank. She said the president is “abusing the authorities of the Department of Justice like a wannabe dictator so the Fed serves his interests, along with his billionaire friends.”
Markets watch closely
Markets treated the news as a fresh institutional risk. Traders began closely monitoring the dollar, interest rate expectations, and volatility measures—factors that often spill over into crypto markets through changes in liquidity and leverage.
Powell’s term as Fed chair ends in May 2026, though he can remain on the Fed’s board until 2028. That timeline makes Trump’s next pick for Fed chair a looming catalyst for interest rates, the U.S. dollar, and Bitcoin’s broader macro outlook.
