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Federal Reserve Chair announces criminal investigation
Jerome Powell revealed on Sunday that federal prosecutors have launched a criminal probe into his conduct, targeting testimony he provided to a Senate committee regarding renovations at Federal Reserve facilities. The U.S. Department of Justice served the Federal Reserve with subpoenas and warned of potential indictment, Powell stated in a video address.
Powell links probe to Trump's frustration over interest rates
Powell described the investigation as "unprecedented" and suggested it stemmed from his refusal to lower interest rates despite repeated public demands from former President Donald Trump. The Fed chair emphasized that the probe raises concerns about the central bank's ability to set monetary policy independently of political influence.
"This is about whether the Fed will continue to base interest rate decisions on economic evidence and data, or whether monetary policy will be dictated by political pressure or intimidation," Powell said.
Jerome Powell, Federal Reserve Chair
He acknowledged that no official-including himself-is above the law but framed the investigation within the broader context of the administration's ongoing efforts to influence the Federal Reserve.
Trump denies involvement, critics warn of erosion of Fed independence
In an interview with NBC News, Trump claimed he had no knowledge of the Justice Department's investigation into Powell. "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 remarked.
The probe marks a new escalation in Trump's long-standing feud with Powell, whom he appointed as Fed chair in 2017. Trump has repeatedly criticized Powell for not cutting interest rates aggressively enough, even threatening to remove him from the role. The Federal Reserve reduced rates three times in the latter half of 2025.
Trump has consistently blamed his predecessor, Joe Biden, and high interest rates for inflation and rising costs in the U.S. economy.
Lawmakers and analysts react
Republican Senator Thom Tillis of North Carolina, a member of the Senate Banking Committee, announced he would oppose any Trump nomination to replace Powell or fill other Fed Board vacancies until the legal 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 statement. "It is now the independence and credibility of the Department of Justice that are in question."
Senator Thom Tillis (R-NC)
Democratic Senator Elizabeth Warren accused Trump of attempting to force Powell out permanently to "install another sock puppet" and complete a "corrupt takeover" of the central bank. She urged the Senate to block any Trump nominees for Fed positions, including the chair.
Market reaction and broader implications
The announcement of the investigation, coupled with ongoing unrest in Iran, triggered a surge in precious metal prices. Gold, often viewed as a safe-haven asset during uncertainty, climbed 1.4% to $4,572.36 per ounce on Monday, briefly reaching a record high of $4,600.33. Silver also hit a peak of $84.58 per ounce before settling at $83.26, a 5.4% increase for the day.
April Larusse, head of investment specialists at Insight Investment, told the BBC's Today programme that the Fed's recent rate cuts demonstrated its responsiveness. "It really isn't the case that the Federal Reserve has been doing nothing on interest rates, so this does feel like pressure that isn't really justified," she said.
Larusse noted that Trump's push for lower rates aligns with his broader economic agenda, particularly for lower-income Americans still grappling with the cost-of-living crisis. "Inflation was very high, wages were not keeping up with inflation-and so there is a big part of the U.S. population that frankly is still suffering," she added.
Historical context: Trump's pattern of targeting adversaries
Powell is not the first official to face legal scrutiny from Trump's Justice Department. The administration previously attempted to remove Lisa Cook, a Federal Reserve governor, over allegations of mortgage fraud, but a federal court blocked the move. The case is set to be heard by the Supreme Court later this month.
Other high-profile targets included New York Attorney General Letitia James, who filed a civil fraud case against Trump in 2024, and former FBI Director James Comey, who led the investigation into Russian interference in the 2016 election. Both cases were dismissed by courts, with James and Comey maintaining their innocence and characterizing the prosecutions as politically motivated.
