In a dramatic escalation of tensions between the White House and the Federal Reserve, President Donald Trump has denied any involvement in the Justice Department's investigation into Federal Reserve Chair Jerome Powell, while simultaneously renewing his attacks on Powell's leadership. The probe centers around whether Powell misled Congress regarding the scope and cost of the Federal Reserve's headquarters renovation project in Washington, D.C.

Powell confirmed that the Federal Reserve had been served with grand jury subpoenas related to his testimony before the Senate Banking Committee in June 2025. The investigation is scrutinizing whether Powell accurately characterized the renovation's expenses and overall progress during his congressional appearances. The U.S. attorney's office for the District of Columbia is leading the investigation, examining Powell's public statements and the Fed's spending records.

The renovation of the Federal Reserve's two main office buildings is estimated to cost $2.5 billion, a figure funded by the central bank itself, not taxpayers. The project, which includes upgrades to buildings that have not been comprehensively renovated since the 1930s, is slated for completion in the fall of 2027, with employees expected to occupy the building by March 2028.

President Trump has been a vocal critic of the renovation project, at one point suggesting possible fraud. He has also repeatedly attacked Powell for not lowering interest rates aggressively enough, a move Trump believes would boost the economy. The Fed cut interest rates by a cumulative 75 basis points in 2025, which fell short of Trump's demands for cuts exceeding 2%. Powell has cited concerns about inflation and the impact of Trump's economic policies as reasons for the more cautious approach.

Powell has defended the Fed's independence, asserting that the threat of criminal charges is a consequence of the central bank setting interest rates based on its assessment of what best serves the public, rather than following the President's preferences. In a rare video message, Powell stated that the core issue is whether the Fed can continue to base interest rates on evidence and economic conditions, or whether monetary policy will be dictated by political pressure or intimidation.

Trump, when asked about the investigation, told NBC that he had no knowledge of the DOJ's actions. However, this denial comes amidst a history of Trump's public criticisms of Powell, and what Powell calls "threats and ongoing pressure". Trump has previously floated the idea of firing Powell and has also said it's "highly unlikely" he'll fire Powell "unless he has to leave for fraud".

Powell's term as Fed Chair is set to expire in May, and Trump is expected to quickly nominate his replacement. White House economic advisor Kevin Hassett and former Fed governor Kevin Warsh are considered frontrunners for the position, both of whom are expected to support Trump's calls for lower interest rates.