In an unprecedented move that has sent shockwaves through global financial markets, the United States Department of Justice has initiated a criminal investigation into Jerome Powell, the Chair of the Federal Reserve.
A Clash Over Monetary Policy
The investigation, authorised under the administration of President Donald Trump, was confirmed by Powell himself in a stark video statement released on January 12, 2026. He revealed that the central bank had been served with subpoenas and faces potential criminal indictments. The official pretext relates to his Congressional testimony last summer concerning renovations to Federal Reserve buildings, which allegedly went over budget by around $600 million.
However, Powell was unequivocal in his assessment of the probe's true motive. "This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings," he stated. "Those are pretexts. 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."
This directly references a reported clash where Trump desired a cut in interest rates, but the Fed's independent analysis led it to maintain its current policy.
Political Fallout and Market Turmoil
Following Powell's statement, President Trump claimed he had no prior knowledge of the indictments but used the opportunity to criticise the Fed Chair, saying, "I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings." He has previously alleged the renovations included extravagant features like 'VIP rooms and rooftop gardens', claims Powell has repeatedly denied.
The investigation has ignited a fierce debate about the sanctity of central bank independence, a cornerstone of modern economic policy. Historians have labelled it a "low point in the history of central banking in America." Notably, some Republican allies have broken ranks. Senator Thom Tillis of North Carolina warned on social media platform X that the action proves efforts "to end the independence of the Federal Reserve" and now places the credibility of the Department of Justice in question.
Investors Flee to Safe Havens
The political storm has triggered immediate repercussions in financial markets. Fears that the independence of the world's most influential central bank is under direct threat have fuelled a dramatic surge in demand for gold as a safe-haven asset.
The price of gold has rocketed to a new record high, completing an astonishing rise of roughly 70% over the past year amidst broader economic and political uncertainty. Susannah Streeter, chief investment strategist at Wealth Club, noted that Wall Street has been "rattled by what’s being viewed as another assault on the independence of the US Federal Reserve."
She added, "It certainly marks a sharp escalation... and is unnerving investors, given that an independent central bank is considered crucial to maintaining sound monetary policy, especially when the mounting US debt pile is under scrutiny."
This confrontation is not the first public disagreement between the two men. Five months ago, during a tour of the renovation site, Trump incorrectly cited escalating costs, a claim Powell immediately corrected while standing beside him. The incident concluded with Trump patting Powell on the back and telling reporters he would love him to "lower interest rates."
