The U.S. Department of Justice has launched a criminal investigation into the head of the country’s central bank.
It alleges Federal Reserve Chair Jerome Powell misled officials about ongoing renovations to the bank’s headquarters.
Powell described the move as an “unprecedented action,” suggesting it was part of a “broader context of the [Trump] administration’s threats and ongoing pressure.”
Federal Reserve
The Federal Reserve, often called the Fed, is the U.S. central bank. It’s equivalent to the Reserve Bank of Australia (RBA).
Like the RBA, the Fed has a board of directors, whose key responsibility is setting the interest rate it charges commercial banks for short-term loans.
Powell has led the Fed since 2018, when he was chosen by then-President Donald Trump. His current term as Chair is set to end in May 2026.
Trump has previously accused Powell of Democratic bias and said he does not intend to reappoint him.
Investigation
Last week, the Department of Justice served the Federal Reserve with grand jury subpoenas.
A grand jury is part of some U.S. court cases. A group of citizens is chosen to determine if a case should become a trial. They hear both sides’ evidence in a closed court (no media allowed) before making a decision.
A subpoena is a formal order from a court for a person or entity to produce documents and communications in a legal proceeding.
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According to Powell, the probe centres on testimony he gave at a Senate hearing last June regarding ongoing renovations to the Federal Reserve’s headquarters in Washington D.C.
The project is set to cost $2.5 billion, higher than expected.
The White House has previously criticised the figure.
Powell Reacts
In a video statement, Powell said that while he has “deep respect for the rule of law and for accountability,” the legal threat was an attempt at “political pressure or intimidation”.
He said the agency had “made every effort to keep [the Government] informed about the renovation project. “
“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 said.
Government response
U.S. Department of Justice (DoJ) attorney Jeanine Pirro is leading the action against Powell.
Pirro accused the Federal Reserve of ignoring multiple attempts to engage, saying “none of this would have happened if they had just responded to our outreach”.
“This office makes decisions based on the merits [of a case], nothing more and nothing less,” Pirro said.
