Federal Reserve Chairman Jerome Powell went public Sunday night with an accusation that President Donald Trump is attempting to manipulate the central bank by dangling a criminal perjury investigation over his head.
Powell confirmed that a Justice Department referral tied to his Senate testimony has triggered a federal probe, framing the move as political retaliation rather than a legitimate oversight dispute.
The referral was submitted in July by Republican Florida Rep. Anna Paulina Luna, who alleged Powell misled the Senate Banking Committee about renovations at the Federal Reserve’s Washington headquarters.
In a video statement, Powell insisted the investigation has little to do with renovation costs and everything to do with interest rate policy that has frustrated the White House.
“I have deep respect for the rule of law and for accountability in our democracy. No one—certainly not the chair of the Federal Reserve—is above the law,” Powell began.
“But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”
Powell rejected the premise of the accusation outright, portraying the renovation issue as a convenient excuse rather than the true motive behind the referral.
“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings,” Powell stated.
“It is not about Congress’s oversight role; the Fed, through testimony and other public disclosures, made every effort to keep Congress informed about the renovation project. Those are pretexts.”
He warned that the investigation represents a direct challenge to the Fed’s independence and its authority to set interest rates without political interference.
“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.
“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.”
Markets reacted quickly after Powell’s statement was released, with stock futures sliding during Sunday night trading.
Dow Jones Industrial Average futures dropped roughly 233 points shortly after 10:30 p.m. EST, a decline of more than 0.4 percent.
S&P 500 futures fell over 0.5 percent, while Nasdaq futures slid 0.8 percent as investors digested the escalating confrontation between the White House and the central bank.
The latest clash follows months of open hostility between Trump and Powell over the pace of interest rate cuts.
Trump has repeatedly criticized the Fed for refusing to lower rates as aggressively as he wants, framing the policy dispute as a drag on economic growth.
The renovation controversy gained attention during a July 24 visit by Trump to the Federal Reserve headquarters construction site.
Accompanied by Republican South Carolina Sen. Tim Scott, Trump confronted Powell with documents claiming the cost of the project had surged well beyond earlier estimates.
“So, we are taking a look, it looks it gets about 3.1 billion, it went up a little bit, or a lot. The 2.7 is now 3.1. It just came out,” Trump said while displaying paperwork he said showed cost overruns.
Powell appeared caught off guard during the exchange, pausing to review the figures before responding.
“I’m not aware of that, I have not heard that from anybody,” Powell replied, later explaining that the $3.1 billion figure included “the Martin renovation,” a separate project completed in 2021 that he described as “a third building” within the Fed’s headquarters complex.
Tensions escalated further in early August as Trump unleashed a series of social media attacks aimed directly at the Fed chair.
In one post, Trump wrote, “Jerome ‘Too Late’ Powell, a stubborn MORON, must substantially lower interest rates, NOW. IF HE CONTINUES TO REFUSE, THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!”
He followed up with another message piling on the criticism, posting, “Too Little, Too Late. Jerome ‘Too Late’ Powell is a disaster. DROP THE RATE! The good news is that Tariffs are bringing Billions of Dollars into the USA!”
Powell has publicly cautioned that short-term economic gains tied to tariffs do not necessarily translate into long-term stability.
“We’ve learned that the process will probably be slower than expected,” Powell said.
“We think we have a long way to go to really understand exactly how” tariffs will affect inflation and the economy.
By mid-November, Trump openly floated the idea of replacing Powell before his term expires.
“I’d love to get the guy currently in there out right now, but people are holding me back,” Trump said ahead of a White House meeting with Saudi Crown Prince Mohammed bin Salman.
Trump labeled Powell’s leadership as a liability to the country. “He’s a fool. He’s a stupid man,” Trump said during the same remarks.
The president also suggested at the time that a decision about Powell’s replacement may already have been made, though his preferred choice declined the position.
“Well, I liked him, but he’s not going to take the job. He refused,” Trump said, referring to Treasury Secretary Scott Bessent. “You like Treasury better, right?”
“Yes, sir,” Bessent responded.
Trump hinted that other candidates were under consideration, signaling both traditional and unconventional options.
“We have some surprising names; we have some standard names that everybody’s talking about,” Trump remarked.
“It’s nice to, every once in a while, go politically correct. But we have some great names.”
By early December, Trump claimed the candidate list had been narrowed dramatically.
At a December 3 Cabinet meeting, Trump suggested that a potential future Fed chair was already present in the room.
“I guess a potential Fed Chair is here too,” Trump said. “I don’t know, are we allowed to say that?”
He then added, “Thank you, Kevin,” identifying National Economic Council Director Kevin Hassett as the possible contender.
The pressure campaign continued into late December, when Trump raised the possibility of legal action against Powell tied to the renovation project.
“We’re thinking about bringing a suit against Powell for incompetence. Because think of it, these aren’t outstanding buildings. These are small buildings,” Trump said during a press conference with Israeli Prime Minister Benjamin Netanyahu.
“It’s gross incompetence against Powell. And it was his baby,” Trump added. “And the guy’s just incompetent. There’s nothing you can do about it.”
Trump originally nominated Powell to lead the Federal Reserve during his first term.
Powell was later renominated by then-President Joe Biden for a second four-year term.
Powell’s current term as Fed chair is set to expire in May 2026, though he could remain on the Federal Reserve Board as a governor through January 2028.
