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A federal judge has halted a U.S. Department of Justice criminal investigation into Jerome Powell, finding the probe appeared to be part of an improper effort by the administration of Donald Trump to pressure the Federal Reserve to lower interest rates more aggressively.
In a newly unsealed opinion, James Boasberg, chief judge of the U.S. District Court for the District of Columbia, quashed subpoenas issued to the Fed earlier this year that sought records related to cost overruns tied to renovations of the central bank’s headquarters.
Boasberg said prosecutors presented no evidence that Powell had committed any crime.
“The Government has offered no evidence whatsoever that Powell committed any crime other than displeasing the President,” Boasberg wrote.
Judge finds probe meant to pressure Fed
The subpoenas were issued in January as part of a grand jury investigation led by the U.S. Attorney’s Office for the District of Columbia.
Officials had said they were investigating cost overruns associated with renovations to the Federal Reserve’s Washington headquarters.
Powell previously argued the investigation was a pretext intended to pressure him over monetary policy. Boasberg agreed, writing there was “abundant evidence” the effort was designed to harass the Fed chair and force him either to cut interest rates or resign.
The dispute has become a major test of the Federal Reserve’s independence from political influence by the White House.
DOJ vows to appeal
Despite the ruling, federal prosecutors signaled they will continue the legal fight.
Jeanine Pirro, the U.S. attorney overseeing the investigation, announced plans to appeal the decision and sharply criticized the judge.
“He has neutered the grand jury’s ability to investigate crime,” Pirro said at a news conference after the opinion was unsealed. “As a result, Jerome Powell today is now bathed in immunity.”
Republican senator backs Powell
The ruling drew praise from Thom Tillis, a Republican senator from North Carolina who sits on the Senate Banking Committee.
“This ruling confirms just how weak and frivolous the criminal investigation of Chairman Powell is,” Tillis wrote in a social media post, calling it an attack on the Fed’s independence.
Powell’s current term as Fed chair expires in May.
Tillis has warned he may block a Senate vote on Trump’s nominee to replace Powell, Kevin Warsh, unless the Justice Department drops its appeal.
“Appealing the ruling will only delay the confirmation of Kevin Warsh as the next Fed chair,” Tillis said.
Broader fight over Fed independence
The case highlights longstanding tensions between Trump and Powell over interest rates.
Trump and several allies have repeatedly criticized the Fed chair for not cutting rates more aggressively to boost economic growth.
Economists have traditionally viewed the Federal Reserve’s independence as critical to maintaining stable monetary policy and avoiding political interference in interest-rate decisions.
