• Powell says DOJ probe follows interest-rate disputes, while Trump denies political motivation.
• Subpoenas relate to Fed headquarters renovation and prior Senate testimony.
• The probe emerges as Powell’s term nears 2026 and Trump weighs next Fed chair.

Federal Reserve Chair Jerome Powell has suggested that a criminal investigation initiated by federal prosecutors is politically motivated. He argued it stems from the central bank’s refusal to align interest-rate policy with the President’s preferences.

This action comes as Powell’s term nears its expiration in May 2026 amid intensifying friction with President Donald Trump.

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Federal Reserve Chair Links Criminal Probe to Rate Policy Standoff

In a recent video, Federal Reserve Chair Powell disclosed that the US Department of Justice issued grand jury subpoenas to the Fed on Friday. According to Powell, the move included the threat of a criminal indictment tied to testimony he delivered to a Senate committee last year concerning the $2.5 billion renovation of the central bank’s headquarters in Washington, DC.

However, Powell described the action as “unprecedented.” He added that it should be viewed within a broader context of sustained pressure and threats directed by the administration.

He emphasized that the Federal Reserve had consistently kept Congress informed about the renovation through testimony and public disclosures. The chair stressed that claims related to the project are being used as a pretext. Powell linked the Justice Department probe to ongoing policy disputes.

“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,” he stated. “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.”

The Federal Reserve cut its benchmark interest rate three times in the second half of 2025. The most recent reduction came in December, putting interest rates in a range of 3.50% to 3.75%. The central bank also ended its quantitative tightening program on December 1, 2025.

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Trump Denies Knowledge of DOJ Probe Into the Federal Reserve

It’s worth noting that since returning to the White House in January 2025, President Trump has repeatedly criticized Powell for not cutting rates more aggressively and has even suggested the possibility of removing him from his post.

However, in an interview with NBC, Trump said he was unaware of any Justice Department investigation involving the Federal Reserve.

“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,” Trump said on Sunday.

He added that the DOJ’s subpoenas had nothing to do with interest-rate policy.

“No. I wouldn’t even think of doing it that way. What should pressure him is the fact that rates are far too high. That’s the only pressure he’s got,” he added.

Meanwhile, with Powell’s term set to expire in May 2026, President Donald Trump is moving closer to naming the next leader of the Federal Reserve. Fox News reported that Trump has narrowed his shortlist to four candidates: Kevin Hassett, Kevin Warsh, Christopher Waller, and Rick Rieder.

According to the report, Trump has one remaining interview before making a final decision. In December, he said the next Fed chair would be someone who “believes in lower interest rates by a lot.”

Kevin Hassett, a long-time conservative economist and a key economic adviser to Trump, is widely viewed as a leading contender to succeed Powell.

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