Federal Reserve Chair Powell faces criminal probe, alleges political pressure

A bitter, years-long feud between the White House and the Federal Reserve has escalated dramatically, with Chair Jerome Powell confirming he is the subject of a criminal investigation that he alleges is driven by political pressure. In a public video statement on Sunday, Powell stated the investigation 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," framing it as a fundamental attack on the central bank's independence.

The Investigation's Official Focus and Powell's Defense

According to multiple reports, the investigation, overseen by the U.S. Attorney's Office in Washington, examines whether Powell misled Congress during testimony last June about the scope and cost of a major $2.5 billion renovation project for the Federal Reserve's headquarters. Powell strongly denied any wrongdoing related to his testimony or the building project. He warned the unprecedented move threatened the Fed's ability to set monetary policy "based on evidence and economic conditions" rather than "political pressure or intimidation," while asserting he respected the rule of law.

President Trump's Denial and Long-Running Criticism

President Donald Trump, who has publicly feuded with Powell for years over interest rate decisions, denied any personal involvement in the investigation during a separate interview. "I don't know anything about it," Trump told NBC News, while reiterating his criticism that Powell is "certainly not very good at the Fed." The president dismissed the notion he pressured officials, stating, "What should pressure him is the fact that rates are far too high." Trump has previously labeled Powell "late" to cut rates, publicly mused about firing him, and suggested filing a lawsuit against him for "incompetence" over the renovation's cost, which he claims could exceed $4 billion.

A Broader Clash Over Institutional Independence

The investigation represents a stark confrontation over the norms separating the executive branch from independent agencies and the federal judiciary. Critics of the Trump administration argue it has systematically eroded the traditional independence of the Justice Department, turning it into a political tool. Powell, whose term as chair ends in May, used his statement to mount a robust defense of the Fed's mandate, stating, "In every case, I have carried out my duties without political fear or favor, focused solely on our mandate of price stability and maximum employment." The probe signals an intense effort to influence or remove a central bank leader who has resisted presidential demands for dramatic rate cuts.