US federal prosecutors have opened a criminal investigation into Federal Reserve (Fed) Chairman Jerome Powell following his testimony before Congress in June regarding the central bank's $2.5 billion headquarters renovation project in Washington, DC.
The investigation focuses on whether Powell provided inaccurate or misleading information to lawmakers about the cost, scope and approval of the project.
Under US law, providing false information to Congress can be considered a criminal offense even if it is not made under oath.
The action is seen as unusual given that the Fed is an institution traditionally free from political influence.
Powell later linked the investigation to the long-standing tension between the Fed and the administration over the direction of interest rate policy, which he said has put ongoing pressure on the central bank's leadership.
The development signals a clear challenge to the Fed's independence, not only for Powell, but also for anyone who will lead the institution after his term ends in May.
President Donald Trump's open criticism of Powell has also shown efforts to influence monetary policy decisions, including calls for lower interest rates.
The criminal investigation marks a significant escalation in the conflict between the administration and the Fed, raising concerns that the next Fed chairman will face continued political pressure in setting interest rate policy.
Investors and global economists have long viewed the Fed's independence as a key pillar of the stability of US monetary policy. This independence allows policymakers to prioritize long-term economic implications over short-term political interests.
The US Department of Justice confirmed that it would not comment further on the investigation, while stressing its commitment to investigating any possible misuse of taxpayer money.
The White House referred all related questions to the Justice Department, while President Trump denied knowledge of the investigation and repeated his criticism of Powell's performance as Fed chairman.
