Fed Chair Says DOJ Opened Criminal Probe to Pressure Him on Interest Rates

Federal Reserve Chair Jerome Powell made a stunning statement Sunday night, claiming the Justice Department is threatening him with criminal charges as part of the Trump administration’s ongoing political pressure campaign for the nation’s central bank to lower interest rates.

Powell delivered a curtly worded statement in a front-facing video posted to YouTube by the official Federal Reserve account, in which he claimed the DOJ on Friday served the central bank with grand jury subpoenas “threatening a criminal indictment,” which he said was related to his Senate testimony last summer about the extensive upgrades being made to the bank’s historic office 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 set by political pressure or intimidation,” he said. He described the move as an attempt by the White House to overturn what global markets have come to rely on as sacrosanct: an independent American central bank that’s solely focused on balancing price stability and maximum employment — not politics. His announcement is likely to roil the stock market Monday morning, given the dependence of bond traders and institutional investors in a non-political Federal Reserve that is traditionally detached from influence from the White House.

The DOJ did not immediately respond to a request for comment. In a brief interview with NBC News Sunday night, Trump denied any 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.

Republican Sen. Thom Tillis, a crucial swing vote on the chamber’s Banking Committee, immediately criticized the Trump White House and said he would “oppose the confirmation of any nominee for the Fed—including the upcoming Fed Chair vacancy—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. It is now the independence and credibility of the Department of Justice that are in question,” he wrote on X.

Powell said the criminal investigation is not about his June testimony before the Senate Banking Committee nor the information the Federal Reserve has shared with Congress about ongoing renovations. Instead, he called those issues “pretexts” that the DOJ is using to intimidate central bank officials to bow to the administration’s pressure to lower interest rates.

The federal funds rate — the target figure set by the central bank that dictates the interest rate charged for overnight loans between banks — rose sharply in 2022 and has remained elevated ever since. It stayed slightly above 4 percent during most of Trump’s first year in office, keeping home loans relatively expensive and depressing economic growth, incensing President Donald Trump and sparking fiery rhetoric from the White House.

Trump has often shrugged off concerns that his tariffs, violent deportation operations, and aggressive foreign policy have rattled the U.S. economy — putting the blame instead on the higher interest rates. And while the Fed has gently lowered the rates in recent months, Trump has often said it hasn’t gone far enough.

Trump has repeatedly voiced a desire to “fire” Powell, but has been held back because Section 10 of the Federal Reserve Act only allows the president to remove a member of the Federal Reserve’s Board of Governors “for cause.” Still, Trump has claimed that he could fire Powell for “fraud,” citing what the president has claimed is an unnecessarily luxurious $2.5 billion upgrade to the central bank’s headquarters in Washington.

That spat became ugly in July last year, when he and Powell — both in white hard hats as they toured the facility — had an argument in front of reporters when the president criticized the costs of the renovation and listed numbers that Powell said were inaccurate.

“It looks like it’s about 3.1 billion. It went up a little bit, or a lot. So the 2.7 is now 3.1,” Trump claimed with a frown, surprising the Fed chair by pulling out a folded piece of paper from his jacket’s left breast pocket.

“I haven’t heard that from anybody at the Fed,” Powell immediately shot back.

When Powell looked at the paper, he corrected the president.

“You just added in a third building, is what that is,” Powell said, pointing out that Trump had included a separate renovation at the Federal Reserve’s William McChesney Martin Jr. Building, which was completed in 2021. “It was built five years ago.”

The exchange only further angered Trump, who would spend the next several months railing at Powell and threatening to yank him from power.