Emre Yumlu 
The launch of a criminal investigation into US Federal Reserve Chair Jerome Powell by federal prosecutors has sent shockwaves through global financial markets and the political establishment in Washington. According to Powell’s own public statements, the investigation is formally linked to testimony he gave to Congress regarding renovation work at the Federal Reserve’s Washington headquarters. However, Powell has been explicit in framing the probe as part of a broader political confrontation centered on US interest rate policy.
Powell Calls Investigation “Unprecedented”
In a video statement released on January 11, Jerome Powell confirmed that the US Department of Justice had issued a subpoena to the Federal Reserve. He stated that prosecutors are considering criminal charges related to his testimony before a Senate committee about the scope and cost of the Fed’s building renovations.
Powell described the situation as “unprecedented,” arguing that the investigation is not merely a legal matter but a direct consequence of his refusal to lower interest rates under political pressure. According to Powell, the case raises a fundamental question about whether US monetary policy will continue to be guided by economic data and evidence, or instead shaped by political coercion and intimidation.
While emphasizing his respect for the rule of law and accountability, Powell warned that the investigation must be viewed within the wider context of sustained pressure on the central bank from the executive branch.
Renewed Tensions Between Trump and the Fed
Former President Donald Trump has repeatedly criticized Powell for not cutting interest rates aggressively enough, frequently blaming the Federal Reserve for economic challenges in the US. Over the years, Trump publicly threatened to remove Powell from his position and pursued similar actions against other Fed officials, including board member Lisa Cook. Those efforts were ultimately blocked by federal courts.
Although the Fed implemented three interest rate cuts in the second half of 2025, Trump and his allies continued to argue that monetary policy remained overly restrictive. Trump has also consistently directed blame toward both the Fed and former President Joe Biden for economic difficulties.
Political Backlash and Institutional Risks
The investigation has triggered strong reactions in Congress. Republican Senator Thom Tillis stated that he would oppose any attempts to replace Powell or other Fed officials until the legal process is fully resolved. On the Democratic side, Senator Elizabeth Warren warned that the investigation represents an effort to undermine the Federal Reserve’s independence and place the institution under political control.
With Powell’s term as Fed chair set to expire in May, speculation about potential successors aligned with Trump has intensified. As a result, the controversy is increasingly seen not only as a legal dispute, but as a pivotal moment for the future independence and credibility of the US central bank.
Overall, the case underscores how legal, political, and economic pressures are converging around the Federal Reserve at a critical juncture for US monetary policy.
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