Criminal Investigation Focuses on June Congressional Testimony Federal prosecutors opened a criminal probe centered on Jerome Powell’s June testimony about the Federal Reserve’s $2.5 billion headquarters renovation, examining whether he or others misled planners or misused funds [1][2]. The case zeroes in on statements regarding project changes and potential procedural violations. Prosecutors have not disclosed specific charges, but the inquiry signals a rare legal challenge to a sitting Fed chair [1][2].

Renovation Budget Swells to $2.5 B, Luxury Elements Highlighted The Fed’s Washington complex renovation, originally estimated at roughly $1.9 billion, now totals about $2.5 billion [1]. Critics point to a roof‑garden terrace, an executive elevator, and extensive marble as cost drivers, while officials argue safety upgrades and modernization were necessary and that marble will be reused where possible [1]. The overrun has become a flashpoint for accusations of fiscal excess.

Powell Casts Probe as Threat to Policy Autonomy Powell released a video asserting the investigation is a pretext to undermine the Fed’s ability to set interest rates based on economic data rather than political pressure [1][2]. He warned that such interference could erode the institution’s credibility and independence. The chair emphasized that monetary policy must remain insulated from partisan influence.

Trump’s Dual Stance: Interviewing Replacements While Denying Knowledge President Trump has been actively interviewing candidates to replace Powell, whose term ends in May 2026, suggesting a strategic move to influence the central bank’s leadership [1]. In a separate interview, Trump denied any knowledge of the criminal probe and criticized Powell’s handling of both policy and the renovation [2]. The contrasting statements illustrate tension between the administration’s public denial and behind‑the‑scenes maneuvering.

Congressional Split and Market Anxiety Over Potential Impact Republican Sen. Thom Tillis said he would block any Trump‑appointed nominee until the investigation resolves, while Democrats such as Sen. Elizabeth Warren and Senate Majority Leader Chuck Schumer condemned the probe as an assault on Fed independence [2]. Analysts warned that the political pressure could provoke market volatility in the final months of Powell’s term [1]. The debate underscores the broader stakes of central‑bank autonomy in U.S. financial stability.