US Federal Reserve chair Jerome Powell says he’s under criminal investigation, won’t bow to Trump intimidation

US prosecutors have opened a criminal investigation of Federal Reserve Chairman Jerome Powell, he confirmed.

Mr Powell on Sunday evening (Monday morning AEDT) said the probe was the result of the Fed “setting interest rates bases on our best assessment of what will serve the public, rather than following the preferences of” President Donald Trump.

“On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas threatening a criminal indictment related to my testimony before the Senate Banking Committee last June that testimony concerned in part, a multi-year project to renovate historic Federal Reserve office buildings,” Mr Powell said in a video statement tweeted by the Fed’s X account.

A person familiar with the investigation told CNBC that they would not dispute the idea that the probe of Mr Powell is related to the building renovation and his testimony to Congress.

“I have deep respect for the rule of law and for accountability in our democracy. No one, certainly not the chair of the Federal Reserve is above the law, but this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure,” Mr Powell said.

The New York Times first reported the probe, citing officials briefed on the matter.

The investigation is being overseen by the US Attorney’s Office for the District of Columbia, according to the newspaper. That office is led by US Attorney Jeanine Pirro, a former New York state prosecutor and Fox News host, who was appointed to that job by President Donald Trump.

Mr Trump has repeatedly blasted Powell for the Fed not cutting interest rates as much and as quickly as the president has demanded since entering the White House in January 2025.

Mr Trump, in an interview with NBC News on Sunday evening, said: “I don’t know anything about it,” referring to the criminal probe of Mr Powell.

“But he’s certainly not very good at the Fed, and he’s not very good at building buildings,” Mr Trump said.

But the president said the DOJ’s subpoenas do not have anything to do with interest rates.

“No. I wouldn’t even think of doing it that way,” Mr Trump told NBC. “What should pressure him is the fact that rates are far too high. That’s the only pressure he’s got.”

Mr Trump has made no secret he intends to remove Mr Powell as chair after his term expires in May.

The two leading contenders are believed to be former Governor Kevin Warsh and Kevin Hassett, the current director of the National Economic Council.

A DOJ spokesperson, in a statement to CNBC, without saying the comment was about Mr Powell, said, “The Attorney General has instructed her US Attorneys to prioritize investigating any abuse of taxpayer dollars.”

Sen. Thom Tillis, a North Carolina Republican, and a member of the Senate Banking Committee, blasted the investigation of Powell and said that he would oppose the nomination of Powell’s replacement by Trump, and any other Fed Board nominee, “until this legal matter is fully 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,” the senator said.

Sen. Elizabeth Warren of Massachusetts, the ranking Democrat on the Banking Committee, echoed Tillis.

“As Donald Trump prepares to nominate a new Fed Chair, he wants to push Jerome Powell off the Fed Board for good and install another sock puppet to complete his corrupt takeover of America’s central bank.” Warren said in a statement.

“Trump is abusing the authorities of the Department of Justice like a wannabe dictator so the Fed serves his interests, along with his billionaire friends,” Warren said. “This Committee and the Senate should not move forward with any Trump nominee for the Fed, including Fed Chair.”

Brian Jacobsen, chief economic strategist at Annex Wealth Management, in a note to clients on Sunday, wrote, “President Trump is trying to bring criminal charges against Powell related to his testimony before Congress about the Fed’s headquarters renovation.”

“Powell may protest by staging a sit-in. His term as Chair is up in May, but his term as a governor isn’t up until January 2028,” Jacobsen wrote.

“With the political pressure on the Fed, he may choose to stay on as a governor out of spite. It would deprive President Trump of the ability to stack the board with another appointee,” Mr Jacobsen wrote. “Stephen Miran’s term is up in January 2026 and that may be the only vacancy Trump gets to fill. It would be unconventional for Powell to stay on, but everything these days is unconventional.”

Mr Trump nominated Mr Powell to the Fed chair position in 2017; he was confirmed in 2018.

But almost from the onset of Mr Powell’s term, Trump has repeatedly badgered the Fed chair about interest rates.

At various times, Mr Trump has called Fed officials “boneheads” and once referred to Powell as a golfer who cannot putt.

Those criticisms intensified during Mr Trump’s second term, as he hectored the central bank to cut rates for months until and even after it implemented three consecutive quarter-percentage-point reductions beginning in September.

During that time, Mr Trump installed his hand-picked choice, Mr Miran, as a Fed governor, and has sought to remove another governor, Lisa Cook, from the board over allegations she committed mortgage fraud. Cook denies those claims.

The Supreme Court is set to hearing arguments on a case challenging Cook’s removal later in January.