Federal Reserve Chair Jerome Powell announced that a criminal investigation has been launched against him due to the renovation of the agency's headquarters. In his opinion, it is related to his dispute with U.S. President Donald Trump regarding the lowering of the key interest rate.
Powell recorded a video message in which he stated that the U.S. Department of Justice sent subpoenas to the Federal Reserve and threatened him with criminal charges due to the testimony he provided to the Senate committee regarding the renovation of the Federal Reserve's Washington headquarters.
He called the investigation "unprecedented" and noted that, in his opinion, it was initiated due to Donald Trump's dissatisfaction with his refusal to lower the key interest rate.
"The question is whether the Federal Reserve will continue to set interest rates based on data and economic conditions, or whether monetary policy will be determined by political pressure or intimidation," Powell said.
"I deeply respect the rule of law and accountability in our democracy. No one, of course, including the Chair of the Federal Reserve, is above the law; however, this unprecedented action should be viewed in the broader context of threats from the administration and ongoing pressure," he added.
The U.S. Federal Reserve Did Not Obey Trump and Kept Rates Unchanged
U.S. stock indices and the dollar fell amid Trump's attack on the central bank chief. Trump stated in an interview with NBC News on Sunday that he knows nothing about the Justice Department's investigation into the Fed chair.
"I know nothing about it, but he is certainly not doing a very good job at the Fed and is not very good at building buildings," he said about Powell.
What Trump Is Unhappy About
The investigation, which prosecutors have yet to confirm, will mark a new escalation in the ongoing conflict between Trump and Powell, whom the president nominated to head the Fed in 2017.
Trump, who promised voters lower loan rates during his campaign, criticized Powell for resisting his demands to significantly lower the key interest rate and referred to him in his posts as a "total loser" and "Mr. Too Late."
However, the Fed makes decisions independently of the president and the executive branch as a whole — this is a fundamental principle of the central bank's operation.
Additionally, Trump criticized Powell for the $2.5 billion renovation of the Fed headquarters. Last week, in an interview with the New York Times, Trump stated that he had decided on a candidate for the new Fed chair. One of the main contenders for this position is Trump's advisor Kevin Hassett.
The renovation of the Fed buildings began in 2022 and is expected to be completed in 2027. As noted by the NYT, its cost may exceed the budget by approximately $700 million.
The Fed states that there has been no comprehensive renovation of the headquarters since it was built in the 1930s. In particular, asbestos and lead contamination need to be removed, and accessibility for people with disabilities must be ensured.
At the same time, the NYT reports that the renovation project included private elevators and dining rooms for high-ranking officials, fountains, and new marble elements, as well as a rooftop terrace for staff.
At congressional hearings in June, Powell stated that many of these elements did not make it into the final project. "There is no VIP dining room, no new marble," he said. "We have removed the old marble, but we are reinstalling it."
