United States prosecutors have opened a criminal investigation into the Federal Reserve that could result in indictments, Chairman Jerome Powell revealed in a video statement on Sunday, accusing the Trump administration of using it as leverage over monetary policy disputes.
Powell confirmed the central bank received grand jury subpoenas on Friday related to his June Senate testimony on renovation costs for Fed office buildings, dismissing them as “pretexts” tied to President Donald Trump’s repeated demands for aggressive interest rate cuts.
“The threat of criminal charges stems from the Federal Reserve prioritising public interest over presidential preferences,” Powell stated, labelling the probe an “unprecedented action” amid escalating “threats and ongoing pressure.”
The inquiry follows Trump’s re-election victory and his intensified public criticisms of Powell for resisting faster rate reductions, challenging long-standing norms of Fed independence.
The central bank, tasked with controlling inflation and unemployment via interest rates, has faced months of friction, including Trump’s surprise July visit to the Fed’s Washington headquarters construction site, where the two clashed over a $600 million cost overrun in front of staff.
Trump, responding to reporters, denied knowledge of the Justice Department probe, remarking, “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.” Markets opened nervously on Monday, with the US dollar weakening, 10-year Treasury yields falling, and gold prices climbing on fears of political interference eroding investor confidence.
Bipartisan lawmakers decried the move as a direct assault on institutional autonomy. Republican Senator Thom Tillis warned it jeopardises the Justice Department’s credibility and vowed to block new Fed nominees until resolution, while Democratic leader Chuck Schumer branded it an attempt to punish dissenters unwilling to align with Trump.
Powell’s term ends in May, with Trump indicating he will appoint a successor committed to immediate rate cuts. Analysts, including ING’s Francesco Pesole, likened the market jitters to past “sell America” episodes during Trump’s trade wars, urging vigilance against broader confidence erosion. (NAN)
