US Federal Reserve Chair Jerome Powell says criminal investigation is 'pretext' for political pressure

The U.S. Department of Justice, the law enforcement agency of the federal government, has opened a criminal investigation into Jerome Powell, the current Chair of the Federal Reserve.

The Federal Reserve is the U.S.'s central bank, responsible for interest rate hikes or cuts, which impacts inflation and therefore influences the American and global economy.

While the president appoints the chair, he or she is meant to work on an independent basis and make decisions without political pressure.

Powell has accused the Trump White House of threatening him in order to achieve their desired cuts for interest rates.

The New York Times (NYT) reported on Jan. 11 (Sunday) that Jeanine Pirro, a former TV host and current U.S. Attorney for the District of Columbia, started the criminal investigation.

Pirro, noted by the NYT as a longtime ally of President Donald Trump, is looking into whether Powell lied to Congress about the scope of the renovation of the central bank's Washington DC headquarters.

The U.S. Attorney's office reports to the Department of Justice, headed by Attorney-General Pam Bondi. A spokesperson for Bondi declined to comment on the investigation in particular, but said Bondi had directed the U.S. Attorneys into investigating cases of "abuse of taxpayer dollars".

In a rare public message, Powell said the legal move was not about his testimony before Congress, but a "pretext" for exerting pressure on him:

"This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings.

It is not about Congress's oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts.

The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.

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."

Trump has previously criticised Powell for not making interest rate cuts, which he believes would boost the economy.

He also tried to oust another Federal Reserve governor, Lisa Cook, over allegations of mortgage fraud. The Supreme Court is set to hear the case later in January 2026.

Top image from AFP.