Powell claims the Fed received subpoenas from the Justice Department, and Trump denies any connection between that and interest rates.

Federal Reserve Chairman Jerome Powell said the Justice Department has served the central bank with grand jury subpoenas and threatened criminal indictments, a rare escalation that puts the Fed’s independence and risk appetite back on the radar of all macro traders.

In a video released Sunday, Powell said federal prosecutors were investigating his testimony before the Senate in June regarding the $2.5 billion renovation of the Federal Reserve headquarters in Washington.

Powell described the move as a reaction to keeping interest rates higher than President Donald Trump wants, saying, “The threat of criminal prosecution is the result of the Fed setting interest rates based on our best assessment of what will serve the public, rather than following the president’s preferences.” »

Trump criticizes Powell, downplays investigation

He said the Justice Department had served the Fed “with grand jury subpoenas, threatening it with criminal indictments related to my testimony before the Senate Banking Committee last June.”

Trump, speaking to NBC News, said he had no knowledge of the investigation and criticized Powell’s leadership, saying, “I don’t know anything about it, but he’s certainly not good at running the Fed, and he’s not good at building buildings.”

Asked if the subpoenas were intended to pressure Powell on interest rates, Trump replied: “No, it didn’t even occur to me to do it that way.” » He added that the subpoenas have nothing to do with interest rates.

Warren accuses Trump of using the Justice Department to pressure the Federal Reserve

The investigation follows months of political wrangling over the renewal process, including a July 2025 referral from Rep. Ana Paulina Luna urging the Justice Department to investigate Powell for perjury and false statements related to that testimony.

On Capitol Hill, Republican Sen. Thom Tillis said he would block confirmation of future Fed nominees until the issue is resolved, warning that the conflict also raises questions about the Justice Department’s independence.

Democratic Sen. Elizabeth Warren said Trump “abuses the powers of the Justice Department like a would-be dictator to make the Fed serve his interests and those of his billionaire friends.”

Markets treated the headlines as a new institutional risk, as traders monitored the dollar, interest rate expectations and volatility indicators that often directly impact cryptocurrency positions via liquidity and leverage.

Powell’s term as Fed chair ends in May 2026 and he may remain on the board until 2028, making Trump’s next choice for the next Fed chair a looming catalyst for interest rates, the dollar and macroeconomic demand for Bitcoin.

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