Federal Reserve Chairman Jerome Powell disclosed on Sunday that the U.S. Department of Justice has threatened him with a criminal indictment. The threat relates to his June testimony about renovations to Federal Reserve buildings, which have exceeded their budget by $700 million.
U.S. Attorney for D.C. Jeanine Pirro, a former Fox News host and ally of President Donald Trump, is leading the indictment effort. The Trump administration has labeled the cost overrun as evidence of Powell's "incompetence."
Powell responded by stating that the indictment threat and incompetence accusations are "pretexts." He asserted they are a direct result of the Federal Reserve setting interest rates based on public interest rather than "the preferences of the President."
In a statement, Powell emphasized that the dispute centers on whether the Fed can independently set rates using data, economic conditions, and expertise, "... or whether instead monetary policy will be directed by political pressure or intimidation."
Following news of the potential indictment, the dollar declined and stock futures dipped. U.S. Senators from both parties quickly denounced the situation and voiced support for Powell.
Democratic Senate Minority Leader Chuck Schumer described it as a continuation of Trump's "assault on the Fed's independence." Republican Senator Thom Tillis of North Carolina said he would refuse to confirm any Trump nominee to replace Powell.
Republican Senate Majority Leader John Thune commented that the allegations "better be real and they better be serious." He added, "The Fed's independence in shaping monetary policy in the country is something that we need to ensure."
A joint statement from multiple former Fed Chairs, Treasury Secretaries, and others called the Fed's independence "critical for economic performance." They compared the criminal indictment to "how monetary policy is made in emerging markets with weak institutions."
By Tuesday morning, central bank heads worldwide released a letter backing Powell. They echoed his belief that central banks must remain free from political pressure to ensure economic stability.
Richard Warr, associate dean for faculty and research at North Carolina State University, noted that U.S. stock markets fell in April 2025 after Trump posted that Powell's "termination cannot come fast enough!"
Tim Mahedy, CEO and chief economist at Access/Macro, told CNN, "Trump is breaking the cardinal rule of central banking: Criticize, but don't politicize." He warned, "He, and all of us, will pay a steep price if he's successful in his pressure campaign — a cost that we would bear for generations."
Powell's term as Fed Chair ends in May, but he could remain on the Board of Governors until 2028.