Fed served with DOJ subpoenas, Powell vows to stand firm

[WASHINGTON] US Federal Reserve chair Jerome Powell said that the US central bank had been served grand jury subpoenas from the Justice Department (DOJ) threatening a criminal indictment, a dramatic escalation of the Trump administration’s attacks on the Fed.

In a forceful written and video statement released on Sunday (Jan 11) evening, Powell said that the action was related to his June congressional testimony on ongoing renovations of the Fed’s headquarters. But he said the move “should be seen in the broader context of the administration’s threats and ongoing pressure.”

“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” Powell said.

Powell added, “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions – or whether instead monetary policy will be directed by political pressure or intimidation.”

The US dollar weakened on the news, falling against all its major counterparts, while gold extended gains to a record high. Futures on the S&P 500 Index fell 0.3 per cent.

The unprecedented move by the Trump administration marks an escalation of US President Donald Trump’s longstanding feud with the Fed chair. The president has repeatedly called for aggressive rate cuts and repeatedly mused about firing Powell. Trump has also sought to fire Fed governor Lisa Cook, another extraordinary step. The Supreme Court is set to take up the Cook case later this month.

Fed policymakers last month cut their benchmark rate to a target range of 3.5 to 3.75 per cent, the third consecutive quarter-point cut, after holding rates steady through much of 2025. Officials have signalled they’re in no rush to lower rates again until they have more data on inflation and jobs.

Policymakers next meet Jan 27 to 28, and futures trading shows a minimal chance of a move at that gathering.

Powell’s future

In the statement, Powell said that he intends to continue doing his job “with integrity and a commitment to serving the American people.”

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Powell’s term as chair will expire in May. His underlying seat on the Fed’s Board of Governor’s does not end until 2028. He has not indicated whether he intends to depart in May or stay on at the central bank.

Trump said that he has already picked his nominee to replace Powell. He has not named Powell’s successor, but Kevin Hassett, the director of the National Economic Council, is a front-runner.

Republican Senator Thom Tillis, a member of the Senate Banking Committee, which oversees the Fed, came to the Fed’s defence on Sunday night. In a statement, he said that he would “oppose the confirmation of any nominee for the Fed – including the upcoming Fed chair vacancy – until this legal matter is fully resolved”.

“If there were any remaining doubt whether advisers within the Trump administration are actively pushing to end the independence of the Federal Reserve, there should now be none. It is now the independence and credibility of the Department of Justice that are in question,” Tillis said.

The investigation is being run by the US Attorney’s Office for the District of Columbia, according to soources familiar with the matter.

Attorney General Pam Bondi has directed US attorneys offices to look into cases of potential taxpayer abuse, said one of the people, who asked not to be identified discussing the probe.

The White House referred questions to the Justice Department. A spokesperson for the Justice Department didn’t immediately respond to a request for comment.

Renovation

The Trump administration last summer ramped up scrutiny over the Fed’s renovation of two historic buildings and rising costs associated with the project. Fed budget documents show cost estimates for the project had risen to US$2.5 billion in 2025, compared with US$1.9 billion in 2023.

In testimony last June, Powell broadly disputed media reports and criticisms from administration officials and some congressional Republicans that the project had extravagant design features, such as a VIP dining room and roof terrace gardens.

Powell also said during the testimony that the project’s plans had “continued to evolve” and that some earlier features “are no longer in the plans”.

Office of Management Director Russ Vought referenced the testimony in a letter he sent to Powell last July, asking for details on the renovation. Bill Pulte, director of the Federal Housing Finance Administration and a fierce critic of Powell, has alleged – without providing details – that Powell lied about the specifics of the project during the hearing and suggested the matter could amount to sufficient legal “cause” to justify removing the Fed chief from his role.

At the time, Republican Representative Anna Paulina Luna also asked the DOJ to consider investigating and prosecuting Powell for allegedly lying under oath in his testimony.

Amid the controversy, Trump toured the renovation site and signalled the project was not reason enough to fire Powell.

Under the law that created the Fed, the president can remove members of the Board of Governors only for cause, generally interpreted to mean inefficiency, malfeasance in office or neglect of duty.

“It sounds like Trumpian vengeance and pressuring him to leave in May,” said Mark Spindel, author of The Myth of Independence: How Congress Governs the Federal Reserve, in reaction to the subpoenas. “If Powell hung around on the board, that complicates Trump’s majority – he needs the seats.” BLOOMBERG