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Federal prosecutors have opened a criminal investigation into U.S. Federal Reserve Chair Jerome H. Powell.
This revolves mainly around his testimony to Congress in June 2025 on the multi-year, multibillion-dollar renovation of the Federal Reserveâs Washington, D.C. headquarters â and whether he may have made false or misleading statements to lawmakers about that project. ďż˝
Wikipedia
đš DOJ has served grand jury subpoenas to the Federal Reserve and threatened a potential indictment. ďż˝
đš The probe was authorized in November 2025 by the U.S. Attorneyâs Office in D.C. under Jeanine Pirro. ďż˝
đš No criminal charges have yet been filed, and itâs unclear whether a grand jury has formally convened beyond the subpoenas. ďż˝
The Economic Times
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Wikipedia
đ Market & Financial Impacts (Initial Reaction)
Markets moved quickly:
⢠U.S. stock futures slid sharply after the news as traders price in political risk to monetary policy. �
⢠The U.S. dollar weakened â reflecting reduced confidence in Fed independence. ďż˝
⢠Gold spiked to record highs as investors sought safe-haven assets amid uncertainty. �
The National
The National
The National
Market sentiment appears more driven by fear of politicized monetary policy than legal specifics at this stage.
đ Fedâs Response & Political Context
Powellâs Public Stance:
⢠Powell released a strong statement calling the investigation âunprecedentedâ and arguing itâs a pretext for political pressure. ďż˝
⢠He directly connected the threat of prosecution to disagreements over interest-rate policy, not the renovation itself. �
⢠Powell emphasized his long bipartisan service and commitment to the Fedâs dual mandate (inflation control & maximum employment). ďż˝
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Political Overtones:
⢠The inquiry unfolds amid a broader Trump administration pushback against the Fedâs policy choices â especially resistance to lowering rates. ďż˝
⢠Some lawmakers and former Fed leaders have warned this could erode central bank independence if political pressure becomes normal. �
Wikipedia
AP News
đ Key Questions Still Unanswered
âĄď¸ Will Powell face charges? No charges have been filed yet â subpoenas and investigations are not indictments. To charge someone for lying to Congress requires proof of knowing, willful misrepresentation. ďż˝
Wikipedia
âĄď¸ Is this purely political? Powell and critics say yes â arguing this measure is tied to rate disputes and administrative pressure. However, DOJâs legal basis is formally tied to congressional testimony accuracy. ďż˝
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âĄď¸ What about independence of the Fed? This situation is already signaling to markets and global central banks that monetary policy may become inseparable from politics â a deeply unsettling prospect for global confidence settings. ďż˝
AP News
đ Context â Why This Matters Globally
đ The Fed plays a central role in global finance â U.S. interest rates influence global borrowing costs, exchange rates, asset prices, and capital flows.
đ Any perceived political weakening of the Fed can ripple across equities, FX markets, bond markets, and risk assets worldwide.
đ Central bank independence was historically defended as crucial to keeping inflation expectations anchored and markets stable.
This case, even without charges, introduces unprecedented political risk into monetary policy decision-making â and that alone drives volatility. ďż˝
AP News
đ§ Quick Takeaway (Analyst View)
Key point:
This story isnât just about a historic renovation or a Fed chair under legal threat.
Itâs about a fundamental clash between political authorities and independent monetary policy â with markets reacting accordingly.
Downside risks right now: ⢠Higher volatility in equities & FX
⢠Shift toward gold/crypto as hedges
⢠Uncertainty around U.S. interest rate direction
⢠Concerns about central bank autonomy globally
Upside narrative for markets: If this investigation fails to produce charges and Powell remains in place, markets might stabilize â but confidence could still be dented.
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