Powell Warns Criminal Investigation Threatens Fed Independence

Federal prosecutors have opened a criminal investigation into Federal Reserve Chair Jerome Powell, a move he described as unprecedented and politically charged, raising fresh concerns over the independence of the US central bank.

In a video message released on Sunday, Powell said the Justice Department had served the Federal Reserve with subpoenas and threatened a criminal indictment related to testimony he gave to a Senate committee about renovations to Federal Reserve buildings.

“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation,” Powell said.

He suggested the investigation was opened after he drew the ire of President Donald Trump by refusing to cut interest rates despite repeated public pressure from the White House.

Powell said he respected the rule of law but warned the probe should be viewed in context.

“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,” he said. “But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”

The Justice Department has not publicly confirmed the investigation. The White House also declined to comment. Trump, speaking to NBC News on Sunday, said he had no knowledge of the investigation.

“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.

If confirmed, the investigation would mark a significant escalation in the long running dispute between Trump and Powell, whom the president nominated as Fed chair in 2017.

Trump has repeatedly criticized Powell for not lowering interest rates as aggressively as he wanted, despite the Fed cutting rates three times in the second half of 2025.

Critics say the pressure campaign risks blurring the line between political authority and monetary policy.

Concerns have intensified as Trump has openly threatened to remove Powell and blamed interest rates, as well as his predecessor Joe Biden, for inflation and high living costs.

Republican Senator Thom Tillis of North Carolina, a member of the Senate Banking Committee, said the investigation raised serious questions about institutional independence.

He said he would oppose any replacement nominee for Fed chair or other Federal Reserve Board appointments 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. “It is now the independence and credibility of the Department of Justice that are in question.”

Democratic Senator Elizabeth Warren said she believed the goal was to force Powell off the Fed board permanently. She accused Trump of trying to “install another sock puppet to complete his corrupt takeover of America’s central bank.”

According to the New York Times, the investigation is being overseen by the US Attorney’s Office for the District of Columbia.

Market reaction was swift. The inquiry, combined with continued geopolitical unrest in Iran, drove investors toward safe haven assets. Gold prices rose 1.4 percent to $4,572.36 an ounce on Monday, after briefly hitting a record high above $4,600. Silver also surged to a record before easing back slightly.

Analysts said the episode added to uncertainty at a time when confidence in institutional independence is already under strain. Powell, for his part, warned that the stakes go beyond his own position.

“This is about preserving the credibility of monetary policy and protecting the foundations of economic stability,” he said.