Trump tightens pressure on Powell? Investigation raises independence fears

• The investigation focuses on Powell's June testimony about the Fed building renovation, now estimated at $2.5 billion and roughly $700 million over budget, though Powell insists Congress was kept fully informed
• Trump has repeatedly pressured Powell to slash rates and criticized him since 2018, recently stating he would 'love to fire him' and suggesting the renovation costs could justify removal
• Powell's term as Fed chair expires in May 2026, but his board seat runs until January 2028; Trump indicated he has already decided on a replacement, with economic adviser Kevin Hassett seen as front-runner

Summary: Trump Administration Opens Investigation Into Fed Chair Powell

The U.S. Justice Department has launched an unprecedented criminal investigation into Federal Reserve Chair Jerome Powell over statements regarding the central bank's headquarters renovation in Washington. This marks the first formal legal action against a sitting Fed chair in modern U.S. history.

Key Developments

Powell released a video statement Sunday rejecting the investigation as politically motivated retaliation for refusing to cut interest rates as aggressively as President Trump demands. He stated: "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."

Trump denied knowledge of the investigation but criticized Powell as "not very good at the Fed" and "not very good at building buildings."

Project at Center of Investigation

The Fed headquarters renovation, beginning in 2022 with completion expected in 2027, is now estimated at approximately $2.5 billion—roughly $700 million over budget. Trump has called it the "highest price of construction per square foot in the history of the world" and previously threatened to sue Powell for "incompetence."

Market Reaction

Financial markets responded negatively Monday: the dollar weakened, Wall Street futures declined, and gold prices rose, reflecting investor concerns about Fed independence.

Political Context

Powell's term as Fed chair expires in May 2026, though his board governorship extends to January 2028. Trump indicated he has selected a replacement, with top economic adviser Kevin Hassett considered a front-runner.

Experts warn the investigation threatens central banking norms and could undermine confidence in U.S. monetary policy during global economic uncertainty.