The US Attorney for the District of Columbia, Jeanine Pirro, said Friday that her office is closing the criminal investigation of Federal Reserve Chair Jerome Powell, increasing the chances of a future confirmation of Kevin Warsh to become the next chief of the US central bank.
Pirro’s post on XPirro said on an X post that the Fed’s inspector general, an internal watchdog, had been asked to investigate cost overruns in the headquarters project, which had been the purported basis for her criminal probe of Powell. “I expect a comprehensive report in short order and am confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas,” she stated.
“Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry,” Pirro added.
Earlier, ABC News broke the story and reported that “Senior DOJ officials have contacted senators in recent days, including Republican Sen. Thom Tillis. who sits on the Senate Banking Committee, informing them of the plan to drop the probe and refer the matter regarding alleged cost overruns at the Fed’s Washington headquarters to the bank’s internal watchdog.”
Since January, Republican Senator Tillis has said he would not approve Warsh to become the next chair unless the DoJ dropped the investigation into Powell. The US Senate is in charge of confirming the next Fed Chair, whose term begins in June 2026.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Source: https://www.fxstreet.com/news/powell-probe-may-be-dropped-by-the-us-doj-abc-news-202604241426
