Federal prosecutors have initiated a criminal investigation into Jerome Powell, the Chair of the Federal Reserve, as disclosed by Powell on January 13, 2026. This investigation, which Powell described as 'unprecedented,' follows subpoenas issued by the U.S. Department of Justice (DoJ) related to his testimony before a Senate committee concerning renovations to Federal Reserve buildings. Powell suggested that the investigation may be linked to former President Donald Trump's dissatisfaction with the Fed's decision not to lower interest rates, despite Trump's public calls for such action.

Powell's remarks represent a significant public response to Trump's ongoing criticism, which has included derogatory comments about Powell's competence. He emphasized the importance of the Federal Reserve's independence, stating that the investigation raises concerns about whether monetary policy will be influenced by political pressures rather than economic evidence. Former Federal Reserve Chair Janet Yellen characterized the investigation as 'extremely chilling,' expressing concern that it reflects the lengths to which the Trump administration may go to exert control over the central bank. Yellen noted that the investigation could undermine the credibility of the Federal Reserve and warned that it could lead to a situation where monetary policy is dictated by political motives.

The Federal Reserve is currently engaged in significant renovations of its buildings, which have not been updated since their construction in the 1930s. This project aims to address health and safety issues, including the removal of hazardous materials. However, Trump has criticized the escalating costs associated with the renovations, claiming they exceed initial estimates.

As Powell's term is set to conclude in May, the investigation could complicate the nomination process for his successor, with some senators indicating they will oppose any nominations until the legal matters are resolved. Senator Elizabeth Warren expressed concerns that Trump aims to replace Powell with someone more compliant, further jeopardizing the independence of the Federal Reserve.

The investigation is being overseen by the U.S. Attorney's Office for the District of Columbia. Critics of Trump's approach argue that his attempts to influence the Federal Reserve could undermine its authority and independence, which are crucial for maintaining economic stability. Economists have warned that the investigation could have negative repercussions for the economy, potentially leading to higher inflation if the Fed is pressured to maintain lower interest rates than necessary. The ongoing tensions have also impacted market reactions, with precious metals prices rising amid uncertainty, although major U.S. stock indexes remained stable. The situation underscores the critical balance between political influence and the operational integrity of the Federal Reserve, an institution established to prioritize long-term economic stability over short-term political interests.