Futures on major U.S. stock indices slipped immediately after Powell’s remarks, reflecting investor concerns over potential ramifications for the central bank’s independence. Analysts warned that further market turbulence could follow if confidence in the Fed’s autonomy erodes.
The investigation became public nearly six months after Rep. Anna Paulina Luna, R-Fla., asked the Justice Department to examine whether Powell committed perjury by downplaying renovation expenses. Luna reiterated her allegations on social media Sunday, arguing that “unelected bureaucrats do not get a free pass.”
The U.S. Attorney’s Office in Washington is headed by Jeanine Pirro, a former New York state prosecutor and television host appointed by Trump last year. A person familiar with the probe confirmed to CNBC that prosecutors are focusing on both the building project and Powell’s congressional testimony.
Asked about the matter in an interview with NBC News, Trump said he was unaware of the subpoenas but criticized Powell’s performance, asserting that interest rates remain “far too high.” The president denied that the Justice Department’s actions were connected to his repeated attacks on the chair over monetary policy.
A DOJ spokesperson, without referring to Powell by name, said the attorney general has instructed U.S. attorneys to prioritize investigations into possible misuse of taxpayer funds.
Powell, 72, has served on the Fed Board since 2012 and became chair in 2018 after being nominated by Trump the previous year. His four-year term as chair ends in May, though his underlying term as a board governor runs until January 2028. The White House has signaled it intends to appoint a new chair, with former Fed Governor Kevin Warsh and National Economic Council Director Kevin Hassett viewed as leading candidates.
Some lawmakers warned that pursuing charges against Powell could undermine both the central bank and the Justice Department. Sen. Thom Tillis, R-N.C., a member of the Banking Committee, said he will oppose any Fed nominations until the legal matter is settled, claiming the probe threatens the institution’s independence. Senate Minority Leader Chuck Schumer, D-N.Y., called the investigation part of an “assault on the Fed’s independence,” while Sen. Elizabeth Warren, D-Mass., accused Trump of trying to install a compliant successor.
Market strategists said the dispute is likely to heighten volatility in U.S. assets. Krishna Guha, vice chair of Evercore ISI, told clients the news was “deeply disturbing” and predicted a classic “sell-America trade” reminiscent of earlier episodes when investors feared political interference in monetary policy. Safe-haven assets such as gold could benefit, he added.
The Fed’s headquarters modernization has been under discussion for years. According to publicly available Fed documents, the project aims to address structural deficiencies and improve security at the main Eccles Building and adjacent facilities. More details on the scope of work can be found on the Federal Reserve’s official website.
While emphasizing his respect for the rule of law, Powell signaled he does not intend to resign. “Public service sometimes requires standing firm in the face of threats,” he said. “I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.”
Crédito da imagem: Saul Loeb | AFP | Getty Images
