Powell Says Fed Received DOJ Subpoenas, Trump Rejects Link To Interest Rates

Fed Reserve Chair Jerome Powell said the Justice Department served the central bank with grand jury subpoenas and threatened a criminal indictment, a rare escalation that puts the Fed’s independence and risk sentiment, back on every macro trader’s screen.

In a video posted Sunday, Powell said federal prosecutors are probing his June Senate testimony tied to the $2.5B renovation of the Fed’s Washington headquarters.

Powell framed the move as retaliation for holding rates higher than President Donald Trump wants, saying, “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.”

Trump Criticizes Powell While Downplaying Investigation

He said the DOJ served the Fed “with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June.”

Trump, speaking to NBC News, said he had no knowledge of the investigation and swiped at Powell’s leadership. “I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings,” he said.

Asked if the subpoenas were meant to pressure Powell on rates, Trump said, “No. I wouldn’t even think of doing it that way.” He also said the subpoenas had nothing to do with interest rates.

Warren Accuses Trump Of Using DOJ To Pressure Fed

The investigation follows months of political sparring over the renovation, including a July 2025 referral from Rep. Anna Paulina Luna urging the DOJ to investigate Powell for potential perjury and false statements tied to that testimony.

On Capitol Hill, Republican Sen. Thom Tillis said he would block confirmations of future Fed nominees until the matter is resolved, warning the fight now raises questions about DOJ independence as well.

Democratic Sen. Elizabeth Warren said Trump is “abusing the authorities of the Department of Justice like a wannabe dictator so the Fed serves his interests, along with his billionaire friends.”

Markets treated the headlines as a fresh institutional risk, with traders watching the dollar, rate expectations and volatility gauges that often feed straight into crypto positioning through liquidity and leverage.

Powell’s chair term ends in May 2026, and he can stay on the Fed board until 2028, leaving Trump’s next chair pick as a looming catalyst for rates, the dollar and Bitcoin’s macro bid.

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