U.S. Federal Reserve Board Chair Jerome Powell speaks throughout a information convention following a Federal Open Market Committee assembly in Washington, D.C., Dec. 10, 2025. AFP-Yonhap
WASHINGTON — United States prosecutors have opened an inquiry threatening a “felony indictment” towards the Federal Reserve, its chairman Jerome Powell revealed, denouncing new “threats and ongoing strain” from the administration of President Donald Trump.
Powell mentioned in a uncommon video assertion Sunday that the U.S. central financial institution acquired grand jury subpoenas Friday associated to his Senate testimony in June, which involved partially a serious renovation mission of Federal Reserve workplace buildings.
He dismissed the subpoenas as “pretexts” after months of bitter battle with Trump, who has publicly excoriated the Fed for not reducing rates of interest aggressively to bolster financial development.
“The specter of felony expenses is a consequence of the Federal Reserve setting rates of interest based mostly on our greatest evaluation of what is going to serve the general public, quite than following the preferences of the president,” Powell mentioned.
“That is about whether or not the Fed will be capable to proceed to set rates of interest based mostly on proof and financial circumstances — or whether or not as an alternative financial coverage will probably be directed by political strain or intimidation,” he mentioned.
The Fed, which makes unbiased financial coverage choices, has a twin mandate to maintain costs secure and unemployment low.
Its predominant software in doing so is by setting a benchmark rate of interest that influences the value of U.S. Treasury bonds and the associated fee and borrowing throughout the economic system.
The Fed’s independence from political affect is taken into account very important for traders, who fear that exterior meddling in financial coverage would threaten a bedrock of the worldwide economic system.
“If the Fed acts on politics quite than knowledge, international traders might pull again on financing the U.S. debt and search new protected havens,” mentioned Atakan Bakiskan, U.S. economist on the German funding financial institution Berenberg.
U.S. President Donald Trump, left, factors to a price sheet as he speaks with Federal Reserve Chair Jerome Powell, on the Federal Reserve in Washington, D.C., July 24, 2025. AFP-Yonhap
‘He isn’t excellent’
Federal Reserve board members sometimes serve underneath each Republican and Democratic presidents, and Powell was nominated Fed chair by Trump throughout his first time period.
However since his re-election final yr, Trump has relentlessly pressured Powell to maneuver quicker in decreasing rates of interest, in a breach of the long-standing independence of the establishment.
Trump mentioned Sunday that he had no information of the Justice Division’s investigation into the Federal Reserve.
“I do not know something about it, however he is actually not excellent on the Fed and he is not excellent at constructing buildings,” NBC quoted Trump as saying.
Nonetheless, traders reacted warily as monetary markets opened Monday, with the greenback falling towards main currencies together with the 10-year U.S. Treasury bond, whereas safe-haven belongings like gold surged.
“The mixed drop within the greenback, equities and Treasuries was a memory of the ‘promote America’ days of final spring,” when Trump unleashed his world tariffs blitz, mentioned Francesco Pesole, a strategist at ING in London.
“The draw back dangers for the greenback from any indications of additional willpower to intervene with the Fed’s independence are substantial.”
‘Corrupt takeover’
Senators from each side of the aisle blasted the investigation.
“It’s now the independence and credibility of the Division of Justice which might be in query,” Republican Thom Tillis mentioned.
“I’ll oppose the affirmation of any nominee for the Fed — together with the upcoming Fed Chair emptiness — till this authorized matter is totally resolved,” he added.
Senate Minority Chief Chuck Schumer, a Democrat, referred to as the probe an assault on the Fed’s independence, saying “Anybody who’s unbiased and would not simply fall in line behind Trump will get investigated.”
Powell’s time period as Fed chair ends in Might, and Trump advised Politico in an interview final month that he would decide Powell’s successor on whether or not they instantly lower charges.
Trump has additionally spoken overtly about ousting Powell however stopped wanting doing so and targeted as an alternative on price overruns for renovation of the Fed’s Washington headquarters.
In July, the price of the Fed’s facelift of its 88-year-old Washington headquarters and a neighboring constructing was up by $600 million from an preliminary $1.9-billion estimate.
That very same month, Trump made an uncommon go to to the development web site throughout which the 2 males, clad in exhausting hats, bickered over the value tag for the makeover.
