Trump Administration Escalates Pressure on Federal Reserve, Threatens Indictment of Chair Jerome Powell

WASHINGTON,  — President Donald Trump’s administration has intensified its pressure campaign against the Federal Reserve by threatening to indict Chair Jerome Powell, a step Powell described as a “pretext” to gain political control over U.S. interest rates.

The threat stems from Powell’s testimony to Congress last summer regarding cost overruns in a $2.5 billion renovation project at the Federal Reserve’s headquarters in Washington. Powell revealed late Sunday that the U.S. Department of Justice (DOJ) had served the Fed with grand jury subpoenas, raising the prospect of criminal charges.

“This unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure,” Powell said, accusing the White House of using legal means to influence the Fed’s monetary policy decisions. He stressed that the issue was not about renovation costs or congressional oversight, but about the Fed’s refusal to cut interest rates as aggressively as Trump demands.

Political Fallout

The move triggered immediate political backlash. Republican Senator Thom Tillis, a member of the Senate Banking Committee, said the threatened indictment calls into question the independence and credibility of the Justice Department.

Tillis announced he would oppose all Trump nominees to the Federal Reserve, including the upcoming choice of Powell’s successor, until the legal issue is resolved.

“At stake is the independence of the Federal Reserve,” Tillis said, warning that political interference could damage investor confidence and U.S. economic stability.

Market Reaction

Financial markets reacted cautiously. U.S. equity futures fell around 0.5%, the dollar weakened, and Treasury yields were little changed as investors assessed the implications of political pressure on monetary policy.

Karl Schamotta, chief market strategist at Corpay, warned that the administration’s actions could have “unintended consequences” that run counter to Trump’s stated economic goals.

Powell’s Position

Powell, originally appointed Fed chair by Trump in 2018, is set to complete his term in May. However, analysts say the growing conflict may increase the likelihood that Powell remains in office in defiance of political pressure.

The escalation comes just weeks before Trump’s effort to remove another Fed official, Governor Lisa Cook, is scheduled to be argued before the U.S. Supreme Court.

Trump Responds

Trump denied knowledge of the DOJ’s actions, telling NBC News:
“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.”

A Justice Department spokesperson declined to comment on the specific case but said prosecutors have been instructed to prioritize investigations involving potential misuse of taxpayer funds.

Experts Warn of Historic Implications

Economists and historians say the inquiry marks a dangerous moment for U.S. governance.

“This is a low point in the history of central banking in America,” said Peter Conti-Brown, a Fed historian at the University of Pennsylvania. “Congress designed the Fed to be insulated from daily political pressures. What we’re seeing now is an attempt to use criminal law to bend monetary policy.”