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By Adeola Adeosun and Gabe Whisnant
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Republican Senator Lisa Murkowski of Alaska has called for a congressional investigation into the Department of Justice (DOJ) following the Trump administration's announcement of a criminal probe into Federal Reserve Chair Jerome Powell.
Murkowski made her statement on Monday on X after speaking with Powell, describing the DOJ's investigation as "nothing more than an attempt at coercion" to pressure the central bank into lowering interest rates. She joined Republican Senator Thom Tillis of North Carolina and other lawmakers in pledging to block President Donald Trump's Federal Reserve nominees until the matter is resolved.
The controversy erupted after Powell revealed Sunday evening that the DOJ served the Fed with grand jury subpoenas and threatened criminal indictment over his June congressional testimony about the Fed's building renovation costs.
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Newsweek reached out to the Federal Reserve via email and the DOJ via online form on Monday for comment.
Why It Matters
The confrontation represents an escalation in Trump's yearlong campaign against Powell, whom he nominated in 2017. Last year, Trump routinely tore into the Fed chair over the central bank's reluctance to slash interest rates as swiftly or by as much as the president desired. Trump dubbed Powell "too-late Powell," a "numbskull," and a "Trump hater," while suggesting he could remove Powell before his term ends and threatening legal action over what he called Powell's "grossly incompetent" handling of the D.C. renovations.
Each threat has aroused fears that Trump is seeking to undermine the Fed's independence and exert greater control over interest rates. While Trump has repeatedly attacked the Fed chair verbally and legally, the latest development marks what many view as a significant escalation.
The bipartisan backlash reflects concerns that political interference in monetary policy could undermine the institution's ability to manage inflation and employment based on economic evidence rather than presidential preferences. Former Fed chair Janet Yellen told Newsweek on Monday, "I agree with Powell’s statement that this is a politically motivated attempt to weaken the Fed’s independence and to control interest rates."
What To Know
The DOJ's criminal investigation centers on the Federal Reserve's multi-year renovation of its Washington, D.C., headquarters, with a focus on Powell's testimony before the Senate Banking Committee last June.
The estimated costs of the renovation have increased from $1.9 billion in 2019 to $2.5 billion in the Fed Board's 2025 budget. During his testimony, Powell defended the project against Republican lawmakers' allegations that the Fed was wasting excessive funds on "lavish renovations," stating that the project would reduce costs over time by allowing the board to consolidate operations.
Murkowski spoke with Powell on Monday morning before issuing her statement calling for a DOJ investigation. She referenced her previous opposition to the administration's Fed appointments, having voted against the White House's nomination of Stephen Miran to the Fed's board in September, which was barely approved by a 48-47 vote. Miran continues to serve as Trump's chair of the White House Council of Economic Advisers while on leave from his Fed post.
Murkowski emphasized that if the DOJ believes an investigation is warranted based on project cost overruns, "then Congress needs to investigate the Department of Justice."
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Tillis announced late Sunday that he would oppose any Trump administration Fed nominees, including Powell's replacement, stating that there should be no remaining doubt that advisers within the Trump administration are actively pushing to end Fed independence.
Democratic Senator Elizabeth Warren of Massachusetts also pledged to oppose any Fed nominee, posting that Trump is abusing the law "like a wannabe dictator so the Fed serves him and his billionaire friends." Democratic Senator Mark Warner of Virginia, a fellow Banking Committee member, characterized the attacks as "the most recent example of Donald Trump's chaos-driven approach to the economy."
The Federal Reserve has cut interest rates by 0.25 percentage points at each of its past three meetings, bringing the current federal funds rate to between 3.50 percent and 3.75 percent. However, Trump has maintained that these cuts are insufficient.
The president's pressure campaign reflects a fundamental disagreement over inflation risk: Powell maintains that inflation remains elevated in the aftermath of Trump's tariffs and requires a cautious monetary policy, while Trump claims inflation is no longer a concern and rates should be slashed dramatically. The Fed is expected to hold rates steady at its next meeting in late January.
Powell holds two separate terms at the Fed: his role as chair expires in May 2026, but he maintains a separate 14-year appointment as a Fed governor until January 2028. This dual status means that even after his chairmanship ends, Powell could remain on the Fed's governing board to continue defending the institution's independence, thereby denying Trump the opportunity to fill another board seat.
In an interview with NBC News on Sunday night, Trump said he had no knowledge of the Justice Department's probe but criticized Powell's performance at the Fed and in building management, adding that "what should pressure him is the fact that rates are far too high."
What People Are Saying
Federal Reserve Chair Jerome Powell said in a statement posted on Sunday: “This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress' oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. 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.”
Alaska Senator Lisa Murkowski said on X: "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. 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."
North Carolina Senator Thom Tillis said on X: "If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none. It is now the independence and credibility of the Department of Justice that are in question."
Massachusetts Senator Elizabeth Warren said on X: "He is abusing the law like a wannabe dictator so the Fed serves him and his billionaire friends. The Senate must not move ANY Trump Fed nominee."
White House press secretary Karoline Leavitt told reporters on Monday: "The president has every right to criticize the Fed chair. He has a first amendment right just like all of you do. And one thing for sure, the president has made it quite clear, is that Jerome Powell is bad at this job. As for whether or not Jerome Powell is a criminal, that's an answer that the Department of Justice is going to have to find out, and it looks like they intend to find that out."
What Happens Next
Powell is due to step down from the Fed chair post in May, though his separate, 14-year term as a governor means he may continue to serve on the central bank board following this departure.
Update 1/12/26, 3:05 p.m. ET: This article was updated with additional information.
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