Fed Chair Powell Says DOJ Probe Is Retaliation for Resisting Trump’s Rate-Cut Pressure

Federal Reserve Chair Jerome Powell has publicly criticized the Trump administration over a newly opened criminal investigation, arguing the probe is retaliation for the central bank’s refusal to cut interest rates under political pressure.

Speaking Sunday, Powell said the investigation represents a broader effort to undermine the Federal Reserve’s independence.

“The charges are a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public,” Powell said, “rather than following the preferences of the President.”

DOJ Investigation Centers on Fed Headquarters Renovation

The U.S. Attorney’s Office for Washington, D.C. opened a criminal investigation on Friday into whether Powell misled Congress about the cost and scope of renovations to the Federal Reserve’s headquarters, according to The New York Times.

The probe follows long-standing criticism from President Donald Trump, who has repeatedly accused Powell of mismanaging the renovation project and has threatened legal action over the issue.

Source: Federal Reserve statement shared via X

Powell Warns of Threats to Central Bank Independence

Powell framed the investigation as part of a sustained campaign to pressure the Fed on monetary policy.

“I have deep respect for the rule of law and for accountability in our democracy,” Powell said. “No one—certainly not the chair of the Federal Reserve—is above the law. But this unprecedented action should be viewed in the broader context of the administration’s threats and ongoing pressure.”

Powell added that the core issue extends beyond his personal position.

“This is about whether the Fed will be able to continue setting interest rates based on evidence and economic conditions—or whether monetary policy will be driven by political intimidation,” he said.

Trump’s Long-Running Dispute With the Fed

President Trump has repeatedly attacked Powell for refusing to aggressively cut interest rates and has openly stated his intention to remove him. Powell’s current term as Fed chair ends in May.

Trump previously attempted to fire Fed Governor Lisa Cook over allegations of mortgage fraud, though the U.S. Supreme Court later blocked the move, reinforcing protections for central bank officials.

Potential Successors Signal More Rate Cuts

Trump has reportedly assembled a list of loyalists who could replace Powell, many of whom support lower interest rates.

Kevin Hassett, a senior economic adviser to Trump, is widely viewed as the leading candidate. Hassett has publicly stated that Trump’s opinions on rates would carry “no weight” in Fed decisions—comments that have drawn skepticism from market observers.

The administration has already gained influence at the Fed. In 2025, Stephen Miran, a close Trump ally, was appointed to the Board of Governors and voted for a 0.5% rate cut at his first meeting in December.

Conclusion: Independence vs. Political Pressure

Powell’s remarks underscore rising tensions between the Federal Reserve and the White House at a time when monetary policy remains highly sensitive to political and economic conditions.

As the DOJ investigation proceeds, markets and policymakers alike will be watching closely—not just for its legal outcome, but for what it signals about the future independence of the U.S. central bank.

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