A Trump-appointed federal prosecutor’s effort to investigate and bring criminal charges against Federal Reserve Board of Governors Chair Jerome Powell is drawing heated pushback from Republicans who could stand in President Donald Trump’s way as he seeks to bully Powell and the central bank into setting artificially lower interest rates ahead of this year’s midterm elections.
Alaska Senator Lisa Murkowski slammed the Department of Justice probe in a Monday X post where she said she’d spoken with Powell about the news that the Department of Justice has issued subpoenas to the central bank indicating that prosecutors are examining the board chair’s testimony on a long-running renovation project that Trump and his allies say was mismanaged on his watch.
The senator said her conversation with Powell had informed her view that it “clear” that the probe “is nothing more than an attempt at coercion.”
“If the Department of Justice believes an investigation into Chair Powell is warranted based on project cost overruns—which are not unusual—then Congress needs to investigate the Department of Justice,” Murkowski said.
“The stakes are too high to look the other way: if the Federal Reserve loses its independence, the stability of our markets and the broader economy will suffer.”
The Alaska senator’s condemnation of the shock probe into Powell came less than a day after her GOP colleague, North Carolina Senator Thom Tillis, issued a blistering statement panning the Trump administration for “actively pushing to end the independence of the Federal Reserve.”
“It is now the independence and credibility of the Department of Justice that are in question,” Tillis added.
The Tar Heel State Republican, who serves on the Senate Banking Committee, also said he’d refuse to vote for any of Trump’s nominees for the central bank — including any pick to replace Powell after his term as chair expires in May — until the investigation is “fully resolved.”
The Banking committee’s ranking Democrat, Senator Elizabeth Warren of Massachusetts, also criticized the Powell probe as an example of Trump “weaponizing the Department of Justice right out in plain view” so he can “take over the Fed as quickly as possible so that he can make political decisions that he thinks will help him rolling into the 2026 election.”
The DOJ investigation, which is being supervised by Trump ally and ex-Fox News presenter Jeanine Pirro, burst into view over the weekend after prosecutors served the central bank with grand jury subpoenas seeking Powell’s testimony from last June before the Senate Banking Committee regarding the Fed headquarters renovation.
Trump, who told reporters on Air Force One that he had been unaware of the investigation before being asked about it late Sunday, has latched onto the building product as a potential reason to fire Powell, slamming the $60 million in cost overruns as “really disgraceful” while speaking to reporters in July. The Fed has attributed the extra expenses on what has become a $2.5 billion project to inflation and the need to conduct expensive asbestos abatement work that was not originally expected.
National Economic Council Kevin Hassett, one of the close Trump allies thought to be a frontrunner to replace Powell as the Fed chair, told CNBC Monday that the probe was totally normal and akin to the work performed by internal watchdogs such as inspectors general.
“It’s part of government to have people look at you …and check that what you’re doing is completely on the up and up. And I think that it’s part of government here and at the Fed as well,” he said.
For his part, Powell confirmed the existence of the investigation in an unprecedented videotaped statement where he said the probe was not about his testimony to Congress or the renovations to Fed headquarters.
“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.
The news of the probe into Powell is just the latest in a year-long effort by Trump to browbeat and bully the central bank’s board into juicing the U.S. economy by drastically slashing the interest rates it raised over a period of years during the Biden administration while attempting to combat runaway post-pandemic inflation.
For months, Trump has verbally assailed Powell as “too late” and worse while frequently threatening to use the headquarters renovation debacle as cause to fire him.
Trump also purported to fire another Fed board member, Biden appointee Lisa Cook, citing allegations of mortgage fraud made against her by Federal Housing Finance Administration head Bill Pulte.
The Supreme Court is set to hear oral arguments this week in a lawsuit that will determine whether Trump can remove Cook — a win for the administration would let Trump nominate one of his own replacements to the bank’s board.
The president has openly spoken about his desire for the Fed to slash the overnight interest rate which determines the cost for banks to borrow or lend money to each other on an overnight basis.
But Trump wants the bank to use rate cuts to stimulate the economy and encourage banks to slash the interest rates they charge for mortgages and to credit card users and has expressed a desire to have more control over monetary policy that has long been the Fed’s exclusive purview.
The last time an American president similarly jawboned a Fed chair was in the early 1970s, when Richard Nixon browbeat then-Fed chair Arthur Burns into slashing rates ahead of his 1972 re-election campaign.
Nixon ultimately reaped the short-term benefits in the form of his historic 1972 landslide victory which saw him win 49 of 50 states over Democratic nominee George McGovern, but by the end of the decade the artificial stimulation he had championed brought about crushing “stagflation” — a combination of low growth and high inflation — that would only be tamed in the mid 1980s after then-chair Paul Volckler instigated a recession by leading the central bank to jack up rates to 20 percent.
Decades later, Trump’s copycat effort to bring the Fed under his thumb — and his attacks on Powell — have alarmed economists who have noted that political interference in central banks invariably leads to disaster.
A trio of Powell’s predecessors — former Fed chairs Janet Yellen, Ben Barnanke and Alan Greenspan — along with ex-Treasury Secretaries Timothy Geithner, Jacob Lew, Henry Paulson and Robert Rubin issued a statement on Substack decrying the justice department’s probe as “an unprecedented attempt to use prosecutorial attacks” to “undermine” the Fed’s 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,” they said.
They added Trump’s desired outcome of placing control of interest rates under presidential control has “no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.”
Justin Wolfers, a University of Michigan economics professor who served as an outside adviser to former president Joe Biden’s 2020 campaign, said on MSNOW on that Trump’s crusade against the Fed’s independence is “pointlessly destructive” and “a bad path to walk down” that is “not going to lead to anything useful either for the American people or for President Trump’s agenda.”
Wolfers also noted that other “populist strongmen” who’ve seized control of their countries’ monetary policies have seen similarly disastrous results and offered the example of Turkey, where dictator Recep Tayyip Erdogan — like Trump — has “enormous self-belief, eschews all experts and believes in the value of low interest rates.”
“Well, he tried that policy. and what happened was inflation in Turkey went from very normal rates up to over 80%. and it’s now back down to something around the mid 30s. It’s a terrible, terrible outcome,” he said.
