Global central bankers back Powell as DOJ probe and Trump rate‑cut push escalate
The Justice Department served grand‑jury subpoenas to the Federal Reserve probing whether Chair Jerome Powell lied to Congress about cost overruns on the Fed’s Washington headquarters renovation — now estimated at roughly $2.5 billion — and Powell issued a video calling the criminal threat “unprecedented,” “intimidation” and a pretext to force rate cuts, while the White House denies the president directed the probe. The move has prompted rare bipartisan outrage and condemnation from former Fed chairs and Treasury chiefs, an extraordinary joint statement of support from major global central banks defending Fed independence, political fallout including threats to block Fed nominees and scrutiny of FHFA Director Bill Pulte, and warnings from economists and market watchers that the controversy could make the Fed less likely to cut rates and unsettle markets.
📌 Key Facts
- The Justice Department served grand‑jury subpoenas to the Federal Reserve on a Friday and has opened a criminal inquiry examining whether Fed Chair Jerome Powell lied to Congress about cost overruns on the Washington, D.C. headquarters renovation; the inquiry was formally approved in November by D.C. U.S. Attorney Jeanine Pirro.
- The renovation’s estimated cost has risen from about $1.9 billion to roughly $2.2–$2.5 billion, and DOJ’s investigation centers on Powell’s June Senate testimony about those overruns.
- Powell issued a rare video statement the following Sunday saying the subpoenas and threat of indictment are "unprecedented," calling the inquiry a "pretext" or "intimidation" intended to coerce the Fed into cutting interest rates rather than letting monetary policy be guided by economic evidence.
- The clash ties to President Trump’s long campaign to force deeper rate cuts (he has sought a federal funds rate as low as 1% while the Fed’s policy range is about 3.5%–3.75%); the White House has denied that Trump personally ordered the probe, while some aides (and allies) have signaled the administration’s antagonism and a possible element of "vengeance."
- FHFA Director Bill Pulte has been a prominent outside agitator — sending criminal referrals and publicly attacking Powell and other officials — prompting a GAO review of Pulte’s use of agency authority and a lawsuit by Rep. Eric Swalwell alleging abuse of FHFA power.
- There has been unusually broad, bipartisan pushback: former Fed chairs and multiple ex‑Treasury secretaries issued a joint condemnation, leading central banks around the world formally rallied in solidarity with the Fed, prominent economists warned of economic and inflation risks, and members of Congress across parties expressed alarm.
- Political fallout includes Sen. Thom Tillis vowing to block confirmation of any Fed nominee until the investigation is resolved, many Senate Republicans privately uneasy but publicly cautious, and Treasury Secretary Scott Bessent privately warning Trump the probe creates a "mess."
- Analysts say the investigation raises the stakes for Fed governance and markets: Powell’s chair term expires in May (he remains on the Board through 2028), the Supreme Court is set to hear a related removal‑power case on Jan. 21, and observers expect the Fed is now less likely to cut rates soon to avoid appearing to yield to political pressure, with some predicting adverse market reactions.
📊 Relevant Data
As of 2023, the Federal Reserve Board's total workforce was 45 percent minority and 44 percent female, with the overall minority workforce increasing by a net of 83 employees.
The Fed - Office of Minority and Women Inclusion Annual Report 2023 — Federal Reserve
In 2022, President Biden appointed Adriana Kugler (first Hispanic woman on the Board), Lisa Cook (second Black woman on the Board), and Philip Jefferson (Black man) to the Federal Reserve Board, increasing its racial and ethnic diversity under congressional pressure.
Diversity at the Fed took one step forward. Now Trump is taking it two steps back — CNN
Contractionary monetary policy, such as interest rate hikes, worsens employment, income, and consumption inequality by race and gender, with larger negative effects on Black and Hispanic households compared to White households.
The Unequal Effect of Interest Rates by Race, Gender — Federal Reserve Bank of San Francisco
Tight labor markets, often resulting from expansionary monetary policy like interest rate cuts, are essential for reducing racial disparities in unemployment and wages, with evidence showing that such policies have a measurable positive impact on narrowing these gaps.
Tight labor markets are essential to reducing racial disparities and boosting Black workers' wages — Economic Policy Institute
Historical examples of political interference in central banks, such as in Argentina where governments pressured the central bank to print money, have led to hyperinflation, with inflation rates exceeding 100% annually in recent years.
Danger ahead! Five examples of risky central bank politicization — Reuters
📊 Analysis & Commentary (2)
The Prosecution of Jerome Powell
"An opinion piece arguing that the DOJ subpoenas and political pressure aimed at Jerome Powell over Fed headquarters testimony are a politicized and dangerous assault on Federal Reserve independence that will chill candid testimony and harm markets and democratic norms."
The Powell disasterclass
"A Politico Playbook column argues the DOJ criminal inquiry into Fed Chair Jerome Powell is a self-inflicted political and messaging disaster for the Trump White House—drawing rare GOP, Treasury and business pushback, distracting from economic priorities, and risking market and institutional fallout."
📰 Source Timeline (22)
Follow how coverage of this story developed over time
January 13, 2026
12:16 PM
The world's most powerful central bankers are rallying behind Jerome Powell
New information:
- A joint statement from top central banks — including the ECB and the central banks of England, Canada, Sweden, Denmark, Norway, Switzerland, Australia, South Korea and Brazil — declares they "stand in full solidarity" with the Fed and Powell and calls central‑bank independence a cornerstone of stability.
- The article specifies that Trump wants the federal funds rate cut to 1%, while the Fed has reduced it only to the 3.5%–3.75% range after a 0.75‑point easing since September.
- Sen. Thom Tillis, a Republican on the closely divided Senate Banking Committee, says he will oppose confirmation of any Trump Fed nominees until the criminal investigation of Powell ends, potentially freezing a replacement if Trump tries to oust him when his chair term expires in May.
- The piece highlights that the Supreme Court will hear oral arguments Jan. 21 on how much power Trump has to remove Fed officials, a case that could reshape the legal contours of Fed independence.
10:00 AM
What to know about Trump's ugly feud with the Federal Reserve
New information:
- NPR lays out a clear three‑part framing of the feud, highlighting that Powell’s Sunday video was triggered specifically by word of grand jury subpoenas served Friday about the Fed’s HQ renovation and his June Senate testimony.
- It details Trump’s long‑running public pressure campaign on rates, including attempts to fire Powell and remove Governor Lisa Cook, placing the subpoenas in that broader pattern.
- Powell reiterates in Senate testimony that the cost jump from $1.9 billion to $2.5 billion is due to inflation and lead/asbestos remediation, not luxurious upgrades, memorably saying, 'There’s no new marble… no roof garden terraces.'
12:19 AM
Stunned Republicans tread carefully on DOJ's Powell investigation
New information:
- Axios details that many Senate Republicans are privately alarmed by DOJ’s criminal investigation of Jerome Powell but publicly cautious, with few willing to directly challenge Trump or demand the probe be dropped.
- The article reports specific quotes and on‑background comments from GOP senators indicating they are trying to avoid a public split between defending Fed independence and crossing Trump.
- It clarifies that, so far, there is no organized Senate Republican push to shield Powell legislatively or via public hearings; leadership is essentially lying low while they gauge political risk.
January 12, 2026
11:55 PM
Powell pushes back as Trump's DOJ launches unprecedented investigation into Fed
New information:
- Jerome Powell publicly confirmed that on Friday DOJ served the Federal Reserve with grand jury subpoenas tied to the Fed’s $2.2 billion headquarters renovation project.
- In a Fed‑released video statement, Powell called the criminal investigation "unprecedented" and said the renovation rationale is a "pretext" for pressuring the Fed over interest‑rate decisions.
- PBS aired extended clips of Trump’s past insults and explicit threat to "fire" Powell, plus a July exchange where Trump confronted Powell about rising renovation costs, and included on‑camera defense of the probe from National Economic Council Director Kevin Hassett, floated as a potential Powell replacement.
11:44 PM
White House denies Trump directed Justice Department to investigate Powell
New information:
- The White House is now on record denying that President Trump personally ordered or directed the Justice Department to open the investigation into Fed Chair Jerome Powell.
- CBS reports growing bipartisan outcry in Congress specifically focused on the risk this probe poses to Federal Reserve independence, not just anger at DOJ.
- The segment underscores that the administration frames the probe as a routine matter of truthfulness in testimony, contrasting with critics who see it as political retaliation over interest‑rate policy.
10:47 PM
Sen. Elizabeth Warren says Justice Department "has been weaponized against Jerome Powell" and Fed
New information:
- Sen. Elizabeth Warren says on CBS that the Justice Department 'has been weaponized against Jerome Powell' and the Federal Reserve.
- She directly characterizes the DOJ investigation into Powell over the Fed headquarters renovation as political retaliation rather than a good‑faith inquiry.
- Warren’s comments show that criticism of the probe is now bipartisan and not limited to former Fed officials or Republicans worried about Fed independence.
10:44 PM
Details on the Justice Department investigation into Jerome Powell
New information:
- CBS segment focuses on nuts‑and‑bolts details of the DOJ criminal inquiry itself — specifically that investigators are examining whether Powell lied to Congress about the Fed’s headquarters renovation — rather than primarily on political reaction.
- Frames the probe explicitly as a "criminal inquiry" into possible false statements to Congress tied to renovation cost overruns, reinforcing that DOJ is treating this as more than an administrative spat over a construction budget.
- Provides additional public‑facing confirmation, via CBS’s justice beat, that the Trump DOJ is actively scrutinizing Powell’s sworn testimony on the headquarters project as part of its case theory.
8:30 PM
What to Know About the Criminal Investigation of Fed Chair Jerome Powell
New information:
- Confirms that the DOJ criminal investigation is specifically focused on Jerome Powell’s oversight of a $2.5 billion renovation of the Federal Reserve’s Washington headquarters.
- Reports that the criminal inquiry was formally approved in November by Jeanine Pirro, the U.S. attorney for the District of Columbia and a longtime Trump ally.
- Details Powell’s rare two‑minute video statement on Sunday accusing the administration of using legal threats as 'pretexts' to coerce the Fed into cutting interest rates.
- Places the Powell probe in a pattern with DOJ investigations into other Trump targets, including former FBI director James Comey and New York Attorney General Letitia James.
7:20 PM
With action against Powell and the Fed, Trump's list of targeted opponents grows longer
New information:
- Adds White House Chief of Staff Susie Wiles’ on-the-record acknowledgment to Vanity Fair that there may be an element of 'vengeance' in Trump’s second term ('Who would blame him? Not me').
- Situates the Powell/DOJ clash in a running list of Trump targets, including an unprecedented attempt to fire Fed Governor Lisa Cook over mortgage-fraud allegations pushed by FHFA Director Bill Pulte.
- Notes that Cook has sued to keep her job and that the Supreme Court has already allowed her to remain on the Fed board while her case proceeds, with arguments expected this month.
- Recaps that former FBI Director James Comey was federally indicted on a charge of lying to Congress tied to the Russia investigation, before that case was tossed, framing it as part of the same retaliatory pattern.
7:14 PM
WATCH: Powell vows to stand firm against 'unprecedented' Trump administration indictment threats
New information:
- Powell publicly confirms that DOJ has not only subpoenaed the Fed but also threatened a criminal indictment related to his June Senate Banking Committee testimony about a $2.5 billion headquarters renovation.
- He states on camera that the criminal threat is, in his view, a 'pretext' to punish the Fed for setting interest rates based on its economic assessment instead of following President Trump’s preferred rate cuts.
- Powell warns that this fight is about whether monetary policy will be guided by evidence and conditions or by 'political pressure or intimidation' from the White House.
- Evercore ISI analyst Krishna Guha predicts a 'sell‑America trade' in response, expecting the dollar, bonds and stocks to fall when markets open and calling the move 'deeply disturbing' and out of the blue.
- Trump tells NBC News he supposedly did not know about the Powell investigation and denies it is meant to pressure the Fed on rates, despite his long public campaign attacking Powell and demanding lower rates.
- The article underscores that the Fed had already tried to placate the administration by scaling back work on climate‑related financial risks, yet still faces criminal threats over its independence.
6:47 PM
DOJ investigation of Powell sparks backlash, support for Fed independence
New information:
- AP piece underscores that several Republican senators have publicly condemned DOJ’s subpoenas, signaling rare cross‑party defense of Powell and Fed independence.
- Economists quoted (including Jason Furman) argue the probe is likely 'ham‑handed' and 'counter‑productive,' potentially strengthening internal FOMC support for Powell and future chairs’ independence.
- The story notes that, because of the investigation, economists expect the Fed is even less likely to cut interest rates at its upcoming meeting in about two weeks, to avoid any appearance of bowing to political pressure.
- It emphasizes that Trump is on the verge of naming Powell’s successor, and analysts now see a higher likelihood that Powell stays on the Board as a governor through 2028 to defend the Fed’s independence.
6:43 PM
Scoop: Bessent told Trump that investigation of Fed chair creates a "mess"
New information:
- Axios reports Treasury Secretary Scott Bessent told President Trump in a private Oval Office‑style conversation that the DOJ probe of Fed Chair Jerome Powell was a 'mess' and politically damaging.
- Bessent is described as urging Trump to de‑escalate or at least proceed cautiously, warning that trying to criminalize Powell’s testimony could spook markets and undercut Trump’s own economic message.
- The story suggests Trump listened but did not commit to backing off, reflecting internal administration divides over how far to go in pressuring the Fed.
5:42 PM
Former Fed chairs, Treasury chiefs condemn Trump admin's Powell probe
New information:
- Three former Fed chairs — Janet Yellen, Ben Bernanke and Alan Greenspan — plus former Treasury secretaries Timothy Geithner, Jacob Lew, Henry Paulson and Robert Rubin issued a joint public statement condemning the DOJ’s criminal inquiry into Jerome Powell.
- The signatories call the probe an 'unprecedented attempt' to use prosecutorial power against the Fed and liken it to how monetary policy is made in 'emerging markets with weak institutions,' warning of 'highly negative consequences for inflation' and broader economic performance.
- Additional heavyweight economists and former officials — including Jared Bernstein, Jason Furman, Glenn Hubbard, Gregory Mankiw, Kenneth Rogoff and Christina Romer — joined the statement, underscoring unusually broad bipartisan concern over political interference with the Fed.
- The statement explicitly ties Fed independence to Congress’s statutory goals for stable prices, maximum employment and moderate long‑term interest rates, arguing that both actual independence and public perceptions of it are now at risk.
5:33 PM
Stocks of credit card companies slump as Wall Street overall drifts in mixed trading
New information:
- Powell’s Sunday video statement squarely links the DOJ subpoenas to the Fed’s willingness to set rates based on its judgment rather than the president’s preferences.
- The article documents that despite those concerns, the S&P 500 hovered near record highs and broader equity indexes saw only modest moves.
- It connects the Powell probe narrative directly with Trump’s renewed 10% APR cap threat, tying both to Monday’s selloff in credit‑card stocks.
5:13 PM
Bill Pulte: How Trump's housing regulator became an attack dog
New information:
- Identifies FHFA Director Bill Pulte as a central outside political actor who has been publicly pressuring Jerome Powell for months, accusing him of lying to Congress about the Fed’s headquarters renovation and calling for his removal 'for cause.'
- Details that Pulte has sent criminal referrals to DOJ not only involving Powell and the Fed but also targeting Fed Governor Lisa Cook, New York AG Letitia James, Rep. Adam Schiff and Rep. Eric Swalwell over alleged mortgage‑fraud schemes; all have denied wrongdoing.
- Reports that the Government Accountability Office has opened an investigation into Pulte’s use of his FHFA position and fraud‑referral authority after Senate Democrats raised concerns that he is weaponizing the agency against Trump’s political enemies.
- Notes that Swalwell has sued Pulte, alleging he abused his FHFA post by trawling data to 'concoct fanciful allegations of mortgage fraud' against political opponents.
- Quotes fresh Jan. 9 comments where Pulte called Powell a 'disaster' and said 'we do need to get rid of Jay Powell,' and labeled Cook 'guilty as hell,' underscoring how closely his rhetoric tracks the subsequent DOJ probe.
4:34 PM
Powell reveals what it would take to step down from the Fed as pressure mounts
New information:
- Fox piece highlights book excerpts from Nick Timiraos’s 'Trillion Dollar Triage' quoting Powell privately saying he would 'never, ever, ever leave this job voluntarily until my term ends under any circumstances.'
- It recounts Powell’s 2019 exchange with Rep. Maxine Waters where he said he would serve out his full term even if Trump tried to fire him, framing today’s standoff as a continuation of that stance.
- The article restates, with Powell’s own words, that the current criminal-threat investigation is 'not about' his June testimony or the renovation project itself but, in his view, about the Fed setting rates independently of the president’s preferences.
4:30 PM
Breaking down Jerome Powell's comments on DOJ investigation
New information:
- CBS piece reiterates that Powell himself publicly announced on Sunday that he is being investigated by DOJ over testimony on the Federal Reserve building renovation.
- It confirms the investigation centers on his June 2025 congressional testimony about cost overruns on the Washington, D.C. Fed headquarters project.
- Provides additional on-air context that this is a Justice Department investigation, not just a routine inquiry, and that Powell framed it as an unprecedented step.
1:56 PM
Republican senator vows to block Trump Fed nominee over Powell investigation
New information:
- Sen. Thom Tillis, R-N.C., said he will oppose confirmation of any nominee to the Federal Reserve Board, including a future Fed chair, until the criminal investigation into Jerome Powell is fully resolved.
- Tillis explicitly framed the probe as evidence that Trump administration advisers are trying to end Fed independence and said the DOJ’s independence and credibility are now in question.
- The article reiterates that Powell’s term as chair expires in May but that he remains on the Board of Governors until 2028, underscoring the timing pressure around selecting a successor.
- Tillis links this blockade to his broader strategy of holding up Trump administration nominees, having just announced similar holds on all DHS nominees until Secretary Kristi Noem appears before Senate Judiciary.
1:46 PM
Federal Reserve's Jerome Powell says DOJ is investigating him over headquarters project
New information:
- CBS piece reinforces that the focus of DOJ’s probe is Powell’s Senate Banking Committee testimony on the cost overruns of the Fed’s D.C. headquarters renovation.
- It confirms, in Powell’s own words on camera, that DOJ is investigating him over that testimony, not over unrelated conduct.
- Segment underscores that the trigger is the headquarters renovation project itself, tying the probe directly to Powell’s prior Senate appearance.
1:24 PM
Fed chair Jerome Powell calls federal investigation "unprecedented action"
New information:
- Powell, in a new video statement aired by CBS, says explicitly that the Justice Department is investigating whether he lied to Congress about the Federal Reserve’s renovation project.
- He characterizes the threat of possible criminal indictment as 'intimidation' and calls DOJ’s move 'unprecedented action.'
- Powell frames the investigation as part of 'the broader context of the administration's threats and ongoing pressure' on the Federal Reserve.
2:01 AM
DOJ subpoenas Federal Reserve in escalating pressure campaign
New information:
- NPR piece confirms Powell’s video statement was released Sunday, Jan. 11, and specifies that the subpoenas arrived at the Fed on Friday.
- It reiterates that the subpoenas relate to potential criminal indictments stemming from Powell’s June Senate testimony on headquarters renovation cost overruns, now estimated at $2.5 billion up from $1.9 billion.
- NPR squarely ties the subpoenas to an 'escalation in the administration's pressure campaign' to force deeper interest‑rate cuts and quotes Powell saying the criminal threat is retaliation for setting rates based on economic assessments rather than the president’s preferences.
- The article re‑emphasizes Trump’s threats to fire Powell when his term ends in May and his attempt to oust Fed Governor Lisa Cook, placing the subpoenas in a broader pattern of political interference with Fed governance.