Months before Federal Reserve Chairman Jerome Powell's term ends, a remarkable legal process has emerged in the US. According to a New York Times report citing sources close to the matter, US federal prosecutors have launched an investigation into Jerome Powell. The investigation is reportedly linked to Powell's previous testimony before Congress regarding the renovation of the Fed buildings in Washington, D.C., reigniting tensions between monetary policy and politics.
Powell speaks about the investigation
Federal Reserve Chairman Jerome Powell argued that the threat of a criminal investigation against him is politically motivated. Powell stated that the process, conducted by the U.S. Department of Justice, is related to the Fed's refusal to shape its interest rate policy in line with the White House's expectations. These statements come as Powell's term is set to end in May 2026 and tensions with President Donald Trump are steadily increasing. In a video message, Powell announced that the Fed received a grand jury subpoena on Friday.
He stated that the subpoena, based on testimony given before the Senate in 2025, contains charges related to a nearly $2.5 billion renovation project at the Fed's headquarters in Washington. Powell described this move as "unprecedented," emphasizing that it should be seen as part of a long-standing political pressure campaign rather than an isolated legal process. The Fed chairman stated that Congress was regularly informed about the renovation project and that the entire process was conducted publicly. Despite this, Powell characterized the use of this as grounds for investigation as a "pretext," arguing that the real issue is monetary policy choices. According to Powell, the threat of criminal charges is a consequence of the Fed setting interest rates based on economic data and the public interest. "This is about whether monetary policy will be based on evidence or on political pressure and intimidation," Powell said, adding that the Fed's independence is under attack. The bank's governor stated that he would not back down from his public interest-oriented approach and would continue to focus on price stability and maximum employment goals throughout his term.
The Fed had lowered its policy interest rate three times in the second half of 2025, bringing the rate range to 3.50–3.75 percent with the last cut in December. The quantitative tightening program was also ended during the same period. However, Trump frequently criticized Powell for not lowering interest rates quickly and deeply enough, even occasionally raising the possibility of his removal. In an interview with NBC, Trump said he was unaware of the Justice Department's investigation into the Fed and argued that the process was unrelated to interest rate policy.
Powell's statements triggered a rapid price movement in the cryptocurrency markets. Bitcoin rose above $92,000 on Sunday night, while strong buying was seen in major altcoins such as Ethereum and Solana. Privacy-focused tokens were particularly noteworthy; Monero recorded double-digit gains, while Zcash also saw sharp price increases.
Who will be the new Fed chairman?
Meanwhile, who Trump will appoint to the Fed chairmanship after Powell is also being closely watched. According to information leaked to the press, the list of candidates includes Kevin Hassett, Kevin Warsh, Christopher Waller, and Rick Rieder. Trump has openly stated that the new chairman will be someone who "believes in much lower interest rates."
