Fed’s Powell Says Trump Administration Threatened Criminal Indictment

Jerome Powell said the Trump administration has threatened him with a criminal indictment tied to his congressional testimony on the Federal Reserve’s $2.5 billion headquarters renovation, calling the move a pretext to pressure the central bank on interest rates.

In a rare public statement late Sunday, Powell said the Department of Justice served the Fed with grand jury subpoenas related to his June testimony before the Senate Banking Committee. Powell said the action should be viewed in the context of sustained political pressure to force faster rate cuts.

“This unprecedented action is not about the renovation or Congress’s oversight role,” Powell said. “Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on what will serve the public, rather than following the preferences of the President.”

President Donald Trump told NBC News he had no knowledge of the Justice Department’s actions, while renewing criticism of Powell’s leadership. A DOJ spokesperson declined to comment on the case, saying prosecutors are prioritizing investigations into potential misuse of taxpayer funds.

Political and Market Fallout

The disclosure intensified a long running clash between Trump and Powell over monetary policy. Trump has repeatedly urged sharper rate cuts and questioned the Fed’s independence since returning to office.

Republican Senator Thom Tillis, a member of the Senate Banking Committee, said the threatened indictment calls the Justice Department’s credibility into question and pledged to block confirmation of any Trump nominees to the Fed until the matter is resolved.

Economists and historians warned the episode could undermine confidence in the Fed’s independence, a cornerstone of US economic policy. Peter Conti-Brown of the University of Pennsylvania called the inquiry a low point for central banking in America.

Financial markets showed limited immediate reaction. Rate futures continued to price in two cuts later this year, though the dollar weakened and US equity futures dipped modestly following Powell’s statement.

What Comes Next

Powell’s term as Fed chair ends in May, though he can remain on the Board of Governors until January 2028. That option could limit Trump’s ability to appoint additional Fed governors in the near term.

The investigation also revives scrutiny of the Fed’s renovation project, which the central bank says involves essential upgrades to aging infrastructure, including asbestos removal and electrical and ventilation improvements.

For now, Powell said he intends to continue doing the job he was confirmed to do, while warning that the episode raises a broader question about whether US monetary policy can remain insulated from political pressure.