Powell Pushes Back on Trump Administration 'Intimidation' Amid Concerns About Fed Independence

Key Takeaways

• The Federal Reserve received subpoenas in a criminal investigation of Fed Chair Jerome Powell on Friday related to his testimony in June about a renovation at the Fed's headquarters.
• The investigation appears to be an escalation of Trump's efforts to force Powell out of his job at the independent central bank.
• Powell called the investigation a pretext and a threat to the independence of the Fed, which is not under direct control of the White House.

In an unprecedented move, Federal Reserve Chair Jerome Powell accused President Donald Trump's administration of waging an intimidation war against the nation's independent central bank.

Powell's remarks, issued in a video released Sunday by the Fed, came after the Department of Justice launched a criminal investigation of Powell on Friday and issued Grand Jury subpoenas related to his testimony to the Senate in June about renovations at the Fed's headquarters.

The investigation is the latest move in an ongoing campaign by Trump to take charge of the Fed, which was set up by Congress to be independent from direct control of the White House. Trump has repeatedly demanded the Fed dramatically lower its key interest rate. Powell and the other members of the Fed's policy committee have lowered rates gradually to support the job market, but have avoided slashing them as much as Trump wants out of concern that setting rates too low could stoke inflation.

What This Means For The Economy

The investigation of Powell could erode the independence of the Federal Reserve, which many economists say is essential to the central bank's ability to keep inflation under control.

Powell Calls Accusations 'Pretexts'

In recent months, Powell has defended the Fed's independence but has avoided commenting directly on Trump's attacks. That changed on Sunday.

In his remarks, Powell said that he would stay on the job despite the investigation and called the accusations against him "pretexts."

"This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings," he added. "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 denied knowledge of the subpoena in an interview with NBC on Sunday.

Former Fed Chairs Condemn Probe

All three living former Fed chairs, Janet Yellen, Ben Bernanke and Alan Greenspan, signed a statement condemning the investigation.

"The Federal Reserve’s independence and the public’s perception of that independence are critical for economic performance, including achieving the goals Congress has set for the Federal Reserve of stable prices, maximum employment, and moderate long-term interest rates," the statement said.

"The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence. This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly. It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success."

The statement was also signed by several former Treasury secretaries of both parties as well as prominent economists.

The Latest in a Series of Threats to Powell

Trump's pressure campaign has included insults and threats to fire Powell, as well as an investigation against and attempt to fire Fed governor Lisa Cook over unproven allegations that she falsified mortgage documents.

"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," Powell said Sunday.

In August, Treasury Secretary Scott Bessent said the Fed should lower its key interest rate by at least 1.5 percentage points. Since then, the Fed has cut its rate by 0.75 percentage point, half of what Bessent asked for. The central bank is expected to hold off on any more rate cuts at its next meeting in late January to see how the economy responds to the cuts so far.

Fed officials have voiced concerns that Trump's economic policies, including his far-reaching tariffs, have slowed the job market and pushed up inflation, hindering the Fed's dual mandate from Congress to keep inflation low and employment high.

Related Education

Federal Reserve Chair's Key Duties and Responsibilities

Federal Reserve Board (FRB): How It Works, Structure, and Duties

Trump Faces Backlash Within Party

The administration's intensified attack on Powell sparked a backlash even in Trump's own party. Senator Thom Thillis of North Carolina, who serves on the banking committee, said he would oppose Trump's Fed nominees until the legal matter was 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," Thillis posted on the X social media platform. "It is now the independence and credibility of the Department of Justice that are in question."

Trump appointed Powell to the role of Fed chair during his first term in office, and President Joe Biden re-appointed him in 2022. The two have frequently disagreed over interest rate policy, and Powell has long resisted Trump's calls for lower rates.

Powell's term as chair expires in May, at which point the job will go to a Trump-nominated successor, subject to approval by the Senate. After that, Powell could stay on the Fed's leadership as a member of the Fed's seven-member board of governors. He has not said if he will do so.

Update, Jan. 12, 2026—This story has been updated to include the joint statement of former Fed chairs condemning the investigation.

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