Federal Reserve chair Jerome Powell has said a US Department of Justice investigation into his conduct is politically motivated, linking the probe to his refusal to bow to pressure from President Donald Trump to cut interest rates.
Speaking publicly about the case, Powell said the investigation follows subpoenas issued after his June testimony to Congress and concerns a costly renovation of Federal Reserve buildings. He denied misleading lawmakers and argued the scrutiny is instead connected to long-running political attacks on the Fed’s monetary policy stance.
According to reporting by Cointelegraph, Powell suggested the probe reflects frustration within the Trump administration over the central bank’s decision to keep rates higher for longer, despite repeated calls from the White House for aggressive cuts to stimulate the economy. Trump has frequently criticised Powell, accusing him of undermining growth and acting too slowly on rate reductions.
The White House has denied directing the investigation, and the Department of Justice has not commented publicly on its scope. Trump has also said he was unaware of the probe itself, while continuing to criticise Powell’s leadership of the central bank.
The episode has reignited debate over central bank independence in the United States. The Federal Reserve is legally insulated from political control, a principle seen by economists as essential for maintaining price stability and market confidence. Any perception that criminal investigations could be used to influence interest rate decisions risks unsettling investors and weakening trust in monetary institutions.
For Europe, the controversy is closely watched. The European Central Bank places strong emphasis on institutional independence as it advances politically sensitive projects such as the digital euro, a principle long associated with major central banks including the US Federal Reserve. The Powell case underlines how quickly that independence can come under strain when monetary policy collides with electoral politics.
Markets have so far remained relatively calm, but analysts warn that prolonged uncertainty around the Fed’s leadership could have broader implications for global financial conditions.