U.S. prosecutors have escalated scrutiny of the Federal Reserve by serving the central bank with grand jury subpoenas, a move that Federal Reserve Chairman Jerome Powell disclosed in a video statement released Sunday night. According to Powell, the subpoenas were delivered by the Justice Department on Friday and relate to his testimony before the Senate Banking Committee last June, testimony that addressed, among other issues, the costly renovation of the Fed’s headquarters in Washington, D.C.
Powell framed the investigation in stark terms. He asserted, without presenting evidence, that the inquiries into both the renovation project and his congressional testimony were merely pretexts designed to exert political pressure on the central bank.
In his telling, the threat of a criminal indictment stems not from misconduct, but from the Fed’s refusal to align interest-rate policy with the “preferences of the president.” Powell warned that the situation cuts to the core of the institution’s independence, arguing that the issue is whether monetary policy will continue to be set according to economic data or be shaped by intimidation and political leverage.
Video message from Federal Reserve Chair Jerome H. Powell: https://t.co/5dfrkByGyX pic.twitter.com/O4ecNaYaGH
— Federal Reserve (@federalreserve) January 12, 2026
The White House, however, publicly distanced itself from the matter. President Donald Trump told NBC News that he had no knowledge of the investigation and denied that it had anything to do with his long-running disagreements with Powell over interest rates.
While reiterating his dissatisfaction with Powell’s performance, both on monetary policy and the management of the Fed’s renovation project, Trump insisted that his criticism should not be conflated with prosecutorial action. He characterized high interest rates as the only “pressure” Powell should feel.
The renovation itself has become a focal point of controversy. Estimated costs have risen to approximately $2.5 billion, drawing sharp criticism from Trump, who has repeatedly described the project as wasteful and mismanaged. Last summer, Trump toured the construction site with Powell, and in August he publicly floated the idea of a major lawsuit over what he called gross incompetence in managing the overhaul. Those comments now sit uncomfortably alongside Powell’s claims of political interference.
Adding to the complexity, a government official confirmed that federal prosecutors are examining both the renovation and Powell’s testimony, and reporting indicates the inquiry was approved in November by Jeanine Pirro, the U.S. Attorney for the District of Columbia. The timing places the investigation squarely amid intensifying political and legal pressure on the Fed’s leadership.
Powell’s position is itself unusual. Although his term as chairman ends in May, his term as a Fed governor runs until January 2028. While it has traditionally been expected that outgoing chairmen relinquish their governor seats, Powell has declined to say whether he will step down.
