US Federal Reserve Chair Jerome Powell said on Sunday (Jan 11) that the Trump administration has threatened him with a criminal indictment over congressional testimony he delivered last summer, marking a dramatic escalation in the long-running conflict between the White House and the independent central bank over interest rate policy.
In a rare and strongly worded public statement released Sunday night, Powell said the Department of Justice on Friday served the Federal Reserve with grand jury subpoenas, warning of a possible criminal indictment related to his testimony before the Senate Banking Committee in June. Powell described the action as a “pretext” designed to intensify political pressure on him to change monetary policy.
“On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June,” Powell said. “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.”
Powell rejected claims that the subpoenas were genuinely tied to his congressional testimony or to the renovation of the Federal Reserve’s headquarters in Washington, a project that has been sharply criticised by the Trump administration. Instead, he framed the move as an unprecedented attempt to use the legal system to influence central bank decision-making.
“No one — certainly not the chair of the Federal Reserve — is above the law,” Powell said. “But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”
The New York Times reported earlier on Sunday that the US attorney’s office for the District of Columbia had opened a criminal investigation into Powell over the scope and cost of the Fed’s building renovation, and whether he misled Congress in his testimony. The inquiry reportedly includes a review of Powell’s public statements and an examination of internal spending records, and was approved in November by US Attorney Jeanine Pirro, according to officials briefed on the matter.
The White House has repeatedly attacked the roughly US$2.5 billion renovation of two historic Fed buildings, describing it as excessive and emblematic of waste. Powell has consistently defended the project as necessary to modernise aging infrastructure, improve safety, and reduce long-term maintenance costs. Last year, the Fed published detailed explanations of the renovation online and sent background materials to administration officials.
During his semi-annual testimony to Congress in June, Powell faced repeated questioning on the project. In July, President Donald Trump made a rare visit to the renovation site, where Powell personally gave him a tour.
Trump has demanded that the Federal Reserve slash interest rates sharply since returning to office in January, arguing that the central bank’s policy is holding back economic growth. He has publicly criticised Powell on multiple occasions and has mused about firing him, despite long-standing legal protections designed to shield the Fed chair from political dismissal.
The administration is also seeking to remove Fed Governor Lisa Cook, a move that is currently pending before the US Supreme Court and has raised additional alarm about executive encroachment on central bank independence.
Economists and legal scholars say the episode strikes at a foundational principle of US economic governance: that monetary policy should be insulated from short-term political pressures. Independent central banks are widely viewed as essential to maintaining price stability and anchoring inflation expectations, particularly during periods of economic uncertainty.
“This is a low point in Trump’s presidency and a low point in the history of central banking in America,” said Peter Conti-Brown, a Fed historian at the University of Pennsylvania. “Congress did not design the Fed to reflect the president’s daily fluctuations. Because the Fed has rebuffed President Trump’s efforts, he is now launching the full weight of American criminal law against its chair.”
Despite the political drama, financial markets showed little immediate reaction. Interest-rate futures continued to price in two rate cuts this year, even after Powell’s term as chair ends in May, suggesting investors do not expect near-term disruption to monetary policy.
The confrontation marks a sharp departure from Powell’s previous approach. Since becoming chair, he has largely avoided commenting on presidential criticism, often noting that elected leaders are entitled to express their views. He has repeatedly pledged to focus solely on the Fed’s dual mandate of price stability and maximum employment.
“I have served at the Federal Reserve under four administrations, Republicans and Democrats alike,” Powell said in his statement. “In every case, I have carried out my duties without political fear or favour.”
He added that public service sometimes requires “standing firm in the face of threats” and said he would continue to do the job the Senate confirmed him to do, “with integrity and a commitment to serving the American people.”
While Powell’s term as chair expires in May, he is legally entitled to remain on the Fed’s Board of Governors until January 31, 2028. That provision limits Trump’s ability to appoint an additional governor, potentially delaying what would be his fourth appointment to the seven-member board until late in his term.
As the standoff intensifies, analysts warn that the implications extend beyond Powell personally, touching on the credibility of US institutions and the long-term stability of economic policymaking. Whether the investigation proceeds or fades, Powell’s extraordinary public rebuke underscores how fraught the relationship between the White House and the Federal Reserve has become — and how high the stakes are for the independence of America’s central bank.
