In a dramatic escalation of legal and political tensions, federal prosecutors in Washington D.C. have initiated a criminal investigation into Jerome H. Powell, the Chairman of the United States Federal Reserve. The probe centres on whether Powell misled Congress regarding the scale and cost of the central bank's headquarters renovation project.
Details of the Federal Reserve Investigation
The investigation, authorised in November 2025, is being handled by the U.S. Attorney's Office for the District of Columbia. Officials familiar with the matter confirm that the inquiry involves a meticulous review of Mr. Powell's public testimony before lawmakers, alongside a detailed scrutiny of spending records linked to the multi-billion dollar renovation of the Fed's headquarters.
The authorisation for this significant legal move was given by Jeanine Pirro, who was appointed to lead the prosecutor's office last year. This development opens a major new legal front against the sitting Fed chair, who has already been navigating a fraught relationship with the political establishment.
The Backdrop of Political Tension with Trump
The criminal probe deepens the existing rift between Powell and former President Donald Trump. Trump has sustained a public campaign against the Fed chair, repeatedly blaming him for keeping interest rates too high. Despite having nominated Powell for the position in 2017, Trump has frequently floated the idea of removing him.
In his criticisms, Trump has specifically targeted the headquarters renovation, labelling it a project marked by "incompetence" and suggesting its cost ballooned to $2.5 billion. He has even hinted at taking legal action over the matter. In a recent interview with The New York Times, Trump revealed he has already chosen a preferred successor to Powell and indicated an announcement could be imminent.
Implications and What Comes Next
This investigation thrusts the normally independent Federal Reserve into unprecedented legal territory. The scrutiny of Powell's congressional statements places the institution's transparency and governance under a harsh spotlight. For financial markets and the global economy, the probe introduces a new layer of uncertainty regarding US monetary policy leadership at a sensitive time.
The situation presents a complex challenge:
- Legal Precedent: A criminal investigation of a sitting Fed chair is a rare and serious event.
- Political Interference: It amplifies concerns about political pressure on the independent central bank.
- Market Stability: The ongoing feud and legal threat could unsettle financial markets seeking policy predictability.
As the U.S. Attorney's office proceeds with its review, the world will be watching closely for developments that could reshape the leadership of the world's most influential central bank.
