US Justice Department Ends Probe Into Federal Reserve Chair Jerome Powell

The US Justice Department has ended its investigation into Federal Reserve chair Jerome Powell over alleged cost overruns linked to renovation projects at the central bank’s headquarters, officials said on Friday. US Attorney Jeanine Pirro confirmed that the criminal inquiry would be dropped, with the matter instead handed to the Federal Reserve’s internal watchdog for further review.

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The decision follows months of political tensions surrounding the central bank and criticism from US President Donald Trump over the cost of upgrading Federal Reserve buildings in Washington.

Internal review to continue

Although the Justice Department has stepped back from the investigation, scrutiny of the renovation project will continue through the Federal Reserve’s Office of Inspector General.

Pirro said in a message posted on social media that authorities would not hesitate to reopen a criminal probe if new evidence justified doing so.

A spokesperson for the White House said the administration believed an internal review would be better suited to determine whether public funds had been mismanaged.

“American taxpayers deserve answers about the Federal Reserve’s fiscal mismanagement,” said White House spokesman Kush Desai. He added that the inspector general’s investigative powers made it “best positioned to get to the bottom of the matter”.

The central bank declined to comment on the decision. The inspector general’s office said it was actively conducting its review and would release its findings to Congress and the public once the process was complete. No timeline was provided.

Political tensions around Powell’s leadership

The investigation emerged during a prolonged dispute between Trump and Powell over monetary policy.

Trump has repeatedly urged the Federal Reserve to reduce interest rates since returning to the White House last year. Powell and other policymakers have resisted those calls, arguing that rate decisions must be guided by economic data rather than political pressure.

During the dispute, Trump publicly criticised Powell, calling him a “knucklehead” and accusing him of doing “a lousy job” for refusing to cut borrowing costs.

Lower interest rates typically stimulate borrowing and economic activity, while higher rates are used by central banks to slow spending and contain inflation.

Trump has long advocated lower rates, reflecting his background as a property developer who frequently relied on borrowed financing.

Renovation costs spark controversy

The dispute intensified last summer after Trump criticised the cost of renovation works at Federal Reserve buildings in Washington.

The president claimed the project could reach $3.1bn (£2.3bn), significantly higher than the central bank’s estimate of roughly $2.5bn.

Federal Reserve officials have said the upgrades — covering the Eccles Building and offices at 1951 Constitution Avenue — are the first major renovation works since the structures were built in the 1930s. The project includes extensive modernisation and the removal of asbestos and lead contamination.

Earlier this year Powell revealed that the Justice Department had issued subpoenas related to testimony he gave to a Senate committee about the renovation programme.

Calling the investigation “unprecedented”, Powell suggested it was linked to political pressure following the Federal Reserve’s refusal to cut interest rates.

He warned at the time that the independence of the US central bank could be at risk if monetary policy became subject to political influence.

Succession battle in the Senate

The probe also became entangled in a political dispute over Powell’s potential successor.

Powell’s term as chair is set to expire on 15 May. Trump has nominated former Federal Reserve governor Kevin Warsh to take over the role.

However, Republican senator Thom Tillis had withheld his support for Warsh’s nomination unless the administration abandoned the investigation into Powell.

Powell has indicated he plans to remain in the position until the Senate confirms a successor.

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Adapted by ASEAN Now. Source 25 April 2026