Fed Chair Powell Blasts Trump DOJ Investigation as Political Pressure

Federal Reserve Chair Jerome Powell delivered a rare televised statement Sunday, accusing the Trump administration of using criminal threats to pressure the central bank into cutting interest rates.

Powell confirmed that the Justice Department served the Fed with grand jury subpoenas on Friday, threatening an indictment over his June 2025 testimony regarding a multi-year renovation of the Federal Reserve’s headquarters buildings.

“The threat of criminal charges 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,” Powell said.

He framed the investigation as an attack on Fed independence, warning that monetary policy risked being “directed by political pressure or intimidation” rather than economic evidence.

Investigation Details Emerge Amid Political Tensions

The criminal probe, approved in November by U.S. Attorney Jeanine Pirro, a longtime Trump ally, centers on whether Powell misled Congress about the scope and cost of the $2.5 billion headquarters renovation project.

The New York Times reported that prosecutors have contacted Powell’s staff multiple times, requesting documents about renovations that began in 2022 and are estimated to run $700 million over budget.

As Cryptonews previously reported, Trump claimed he had “no knowledge” of the investigation but criticized Powell’s performance.

“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,” Trump said.

He denied the subpoenas related to interest rate policy, stating, “I wouldn’t even think of doing it that way.“

Powell addressed the renovation controversy directly during June testimony, denying features described in earlier proposals.

“There’s no V.I.P. dining room; there’s no new marble,” he testified.

“We took down the old marble, we’re putting it back up.” The Fed later published documentation supporting Powell’s statements, citing cost increases from asbestos contamination, soil issues, and materials inflation.

Bipartisan Backlash Threatens Trump’s Fed Nominations

The investigation triggered immediate opposition from both parties in Congress.

Senator Thom Tillis, a Republican of North Carolina and Banking Committee member, vowed to block all Trump Fed nominees until the matter is resolved.

“If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” Tillis said in a X post.

Senator Elizabeth Warren, the committee’s top Democrat, also accused Trump of “abusing the authorities of the Department of Justice like a wannabe dictator so the Fed serves his interests, along with his billionaire friends.“

She called for the Senate to halt consideration of all Trump-appointed Federal Reserve officials, including the upcoming chair vacancy.

Powell’s term as chair expires in May, though his Board of Governors seat runs through January 2028.

Trump told The New York Times last week he has decided on Powell’s replacement, with National Economic Council Director Kevin Hassett emerging as the frontrunner.

Hassett previously disclosed owning $1 million to $5 million in Coinbase stock and served on the exchange’s regulatory advisory council, aligning with industry calls for a pro-crypto Fed Chair.

Markets React as Fed Independence Concerns Mount

Financial markets responded negatively to the escalating conflict. The dollar fell broadly, U.S. stock futures declined, and Treasury futures rallied as investors digested implications for central bank autonomy.

“By trying to influence the central bank through aggressive legal threats against individual officials, the administration could drive inflation expectations higher, erode the dollar’s safe-haven role, and trigger a sharp rise in long-term bond yields,” said Karl Schamotta, chief market strategist at Corpay in Toronto, told Reuters.

Christopher Hodge, chief U.S. economist at Natixis, also warned that sustained pressure could eventually provoke market revolt.

“The market has shaken off so much noise around the Fed and Fed independence and I think is probably likely to do it again, but at some point things will break,” Hodge said.

The investigation follows a broader pattern in the Trump administration of opposing the Fed’s decisions and going after the institution with allegations.

In fact, the White House announced last week it was creating a new Justice Department division for fraud enforcement, despite previous criminal cases against Trump targets, including James Comey and Letitia James, being dismissed for prosecutorial irregularities.

Powell concluded his statement with defiance despite the threats.

“Public service sometimes requires standing firm in the face of threats,” he said. “I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.“