Tuesday, January 13, 2026 - US prosecutors have launched an inquiry that could lead to a “criminal indictment” of the Federal Reserve, Chairman Jerome Powell said on Sunday, January 11, accusing the Trump administration of escalating “threats and ongoing pressure” over monetary policy.
Powell appeared in a video statement confirming that the
central bank received grand jury subpoenas on Friday, January 9, related to his
June Senate testimony about renovation costs for Federal Reserve office
buildings. He described the subpoenas as “pretexts” linked to months of
conflict with President Donald Trump, who has repeatedly criticized the Fed for
not cutting interest rates more aggressively.
“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 said. He called the move an “unprecedented action” and part of the
administration’s broader campaign of “threats and ongoing pressure.”
The inquiry comes as Trump has intensified public attacks on
Powell since winning re-election, demanding faster rate cuts in a break with
decades-long norms around Fed independence. The central bank is mandated to
keep inflation low and unemployment stable, using interest rates as its main
tool.
Trump told reporters he had no knowledge of the Justice
Department’s inquiry. “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,” he said
when asked about Powell.
Markets reacted nervously as trading opened Monday, January
12, with the US dollar weakening against major currencies and benchmark 10-year
Treasury bonds sliding. Gold prices rose amid uncertainty. Strategists warned
that further political interference could hit investor confidence, with ING’s
Francesco Pesole noting the market mood resembled the “sell America” sentiment
seen during Trump’s trade tariff disputes.
Lawmakers from both parties condemned the investigation as a
threat to the central bank’s independence. Republican Senator Thom Tillis said
the Justice Department’s credibility was now at stake, adding that he would
block confirmation of any new Fed nominees “until this legal matter is fully
resolved.” Democratic Senate leader Chuck Schumer accused the administration of
targeting anyone who refused to “fall in line behind Trump,” calling it an
assault on the institution.
Powell’s term expires in May, and Trump has signaled he will
choose a successor based on their willingness to cut rates immediately. The
president has previously suggested removing Powell but instead focused
criticism on cost overruns at the Fed’s Washington headquarters, where
renovation estimates rose by roughly $600 million last year.
Trump made a surprise visit to the construction site in
July, where he and Powell, wearing hard hats, argued over the price tag in
front of staff.
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