FED

April 26 (UPI) — U.S. Sen. Thom Tillis, R-N.C., said on Sunday that he will end his blockade of Kevin Warsh’s confirmation as Federal Reserve chair after the Department of Justice ended its investigation into current chair Jerome Powell.

U.S. Attorney Jeanine Pirro on Friday said the Justice Department was ending its investigation into Powell over the Fed’s budget for renovations to its headquarters and has threatened him with criminal charges over testimony he gave about the costs.

Tillis made the announcement during an interview on NBC News’ “Meet The Press,” because the department assured him that it has “completely and fully ended” the investigation.

He had previously said he would block all Trump nominees until the probe was dropped.

“We worked a lot over the weekend to make sure that we were very clear that we have assurances from the Department of Justice that I needed to feel like they were not using the department as a weapon to threaten the independence of the Fed,” Tillis told NBC News.

The Justice Department launched a criminal investigation into Powell in January after President Donald Trump questioned the Fed being over budget on renovations to its headquarters in Washington, D.C.

The investigation was condemned by several members of Congress as improper, including Tillis, because it was seen as politically motivated punishment from Trump for not setting interest rates at levels he preferred.

Pirro said Friday that she has asked the Federal Reserve’s inspector general to investigate the renovation costs, which she said is “billions of dollars” over budget, and that she expects a “comprehensive report” on the matter.

She noted, however, that she “will not hesitate to restart a criminal investigation should the facts warrant doing so.”

The announcement on Friday is expected to clear the path for the confirmation of his successor, Kevin Warsh.

The United States Department of Justice has ended its probe into US Federal Reserve chair Jerome Powell, clearing a major roadblock to the confirmation of his successor, Kevin Warsh.

US Attorney for the District of Columbia Jeannine Pirro said on X on Friday that her office was ending its probe into the Fed’s extensive building renovations because the Fed’s inspector general would scrutinise them instead.

Pirro, a Trump ally and the top federal prosecutor in Washington, DC, said she had instead asked the Fed’s internal watchdog, the Office of Inspector General, to examine cost overruns in renovations of the central bank’s Washington headquarters.

“The IG has the authority to hold the Federal Reserve accountable to American taxpayers,” Pirro said in a social media post. “I expect a comprehensive report in short order and am confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas.”

The move could lead to a swift confirmation vote by the Senate for Warsh, a former top Fed official whom US President Donald Trump, a Republican, nominated in January to replace Powell. Powell’s term as chair ends May 15.

Senator Thom Tillis, a North Carolina Republican, had said he would oppose Warsh until the investigation was resolved, effectively blocking his confirmation.

The leadership transition at the world’s leading central bank could now proceed quickly.

Republicans praised Warsh during a Tuesday hearing even as Democrats questioned his independence from Trump, the lack of transparency around some of his financial holdings, and what they said was his flip-flopping on interest rates. Senator Elizabeth Warren of Massachusetts, the ranking Democrat on the committee, questioned if Warsh will be a “sock puppet“.

Still, Trump’s previous appointment to the Fed’s board of governors, Stephen Miran, was approved by the full Senate just 13 days after his nomination.

No evidence

The investigation was among several undertaken by the Department of Justice into Trump’s perceived adversaries. For months, it had failed to gain traction as prosecutors struggled to articulate a basis to suspect criminal conduct.

A prosecutor handling the case conceded at a closed-door court hearing in March that the government had not yet found any evidence of a crime, and a judge subsequently quashed subpoenas issued to the Federal Reserve.

The judge, James Boasberg, said prosecutors had produced “essentially zero evidence” to suspect Powell of a crime. Boasberg branded prosecutors’ justification for the subpoenas as “thin and unsubstantiated”.

More recently, prosecutors made an unannounced visit to a construction site at the Fed’s headquarters but were turned away, drawing a rebuke from a defence lawyer in the case who called the manoeuvre “not appropriate”.

Warsh said during the Senate hearing on Tuesday that he never promised the White House that he would cut interest rates, even as the president renewed his calls for the central bank to do so.

“The president never once asked me to commit to any particular interest rate decision, period,” Warsh said during the hearing. “Nor would I ever agree to do so if he had … I will be an independent actor if confirmed as chair of the Federal Reserve.”

Warsh’s comments came just hours after Trump, in an interview on CNBC, was asked if he would be disappointed if Warsh did not immediately cut rates and responded, “I would.”

The decision to abandon the investigation represents a rare pullback for a Department of Justice that over the last year has moved aggressively, albeit unsuccessfully, to prosecute public figures the president does not like.

Robert Hur, an lawyer for the Federal Reserve Board of Governors, did not immediately respond on Friday to an email seeking comment.

WASHINGTON — The Justice Department has ended its probe into Federal Reserve chair Jerome Powell, clearing a major roadblock to the confirmation of his successor, Kevin Warsh.

U.S. Attorney for the District of Columbia Jeannine Pirro said on X that her office was ending its probe into the Fed’s extensive building renovations because the Fed’s Inspector General would scrutinize them instead.

The decision ends an investigation, one of several undertaken by the Justice Department into President Trump’s perceived adversaries, that for months had failed to gain traction as prosecutors struggled to articulate a basis to suspect criminal conduct.

A prosecutor handling the case conceded at a closed-door court hearing in March that the government hadn’t yet found any evidence of a crime, and a judge subsequently quashed subpoenas issued to the Federal Reserve. The judge, James Boasberg, said prosecutors had produced “essentially zero evidence” to suspect Powell of a crime. Boasberg prosecutors’ justification for the subpoenas as “thin and unsubstantiated.”

More recently, prosecutors made an unannounced visit to a construction site at the Fed’s headquarters but were turned away, drawing a rebuke from a defense attorney in the case who called the maneuver “not appropriate.”

The move could lead to a swift confirmation vote by the Senate for Warsh, a former top Fed official whom Trump, a Republican, nominated in January to replace Powell, whose term as chair ends May 15. Sen. Thom Tillis, a North Carolina Republican, has said he would oppose Warsh until the investigation was resolved, effectively blocking his confirmation.

Warsh said Tuesday that he never promised the White House that he would cut interest rates, even as the president renewed his calls for the central bank to do so.

“The president never once asked me to commit to any particular interest rate decision, period,” Kevin Warsh, a former top Fed official, said under questioning by the Senate Banking Committee. “Nor would I ever agree to do so if he had. … I will be an independent actor if confirmed as chair of the Federal Reserve.”

Warsh’s comments came just hours after Trump, in an interview on CNBC, was asked if he would be disappointed if Warsh didn’t immediately cut rates and responded, “I would.”

Kevin Warsh, the man nominated to lead the Federal Reserve, the world’s most important financial institution, told the US Senate Banking Committee on Tuesday that he had made no secret agreements with the White House over interest rate policy, defending his professional integrity.

ADVERTISEMENT

ADVERTISEMENT

He said he would act independently if confirmed to succeed Jerome Powell, despite continued public pressure from US President Donald Trump for lower borrowing costs.

The question of that independence was put sharply to him during the hearing, when Republican Senator John Kennedy asked whether he would be Trump’s “human sock puppet”. Warsh replied: “Absolutely not.”

His comments came amid broader concerns on Capitol Hill about the future direction of the central bank, with lawmakers divided over his past record and approach to monetary policy.

Warsh insisted that the President had never asked him to commit to any specific interest rate path and said he would not have agreed to such a request.

The hearing highlighted the significant pressure facing the Federal Reserve as it maintains its independence while addressing inflation, which remains at 3.3%.

Just hours before the session began, US President Donald Trump stated in a CNBC interview that he would be disappointed if Warsh did not immediately implement rate cuts.

This current friction suggests that the White House may struggle to secure the necessary votes to confirm Warsh before Powell’s term as Fed Chair expires on 15 May.

Democratic opposition and Republican dissent

Democratic senators were particularly vocal in their scepticism, accusing Warsh of shifting his economic stance to suit the political climate.

US Senator Elizabeth Warren labelled the nominee a “sock puppet”, suggesting his installation would facilitate an “illegal takeover” of the institution.

Critics also pointed to his historical record, alleging that he favoured higher rates during Democratic administrations but has become more dovish under Republican leadership.

US Senator Ruben Gallego cited reporting from the Wall Street Journal (WSJ), which claimed the President had previously urged Warsh to reduce borrowing costs. Warsh responded by stating that such reports were based on inaccurate sources and reiterated that the independence of the Fed is “essential” for economic stability.

Despite Trump’s backing, the nomination also faces a critical roadblock within the Republican Party.

US Senator Thom Tillis, a Republican from North Carolina, reiterated his refusal to support Warsh as long as a Department of Justice investigation into Jerome Powell continues.

The probe, led by Assistant US Attorney Jeannine Pirro, is examining whether Powell committed perjury during testimony last year regarding the budget of a Federal Reserve building renovation project.

Tillis and other Republican colleagues have expressed their support for Powell, arguing that the investigation is meritless. According to Tillis, he will not vote for a successor until the “investigation is dropped,” a stance that effectively freezes the nomination in a closely divided committee.

Federal prosecutors have reportedly continued their efforts to access Fed records as recently as last week, even after a judge previously found no evidence to support the charges.

Legal and ethical hurdles

The proceedings also delved into Warsh’s personal financial interests and the logistical challenges of a potential leadership transition.

US Senator Elizabeth Warren raised questions about the nominee’s investments in private entities, including SpaceX and Polymarket, noting that the specific size of these holdings had not been fully disclosed to the public.

Warsh defended his position by stating that the Office of Government Ethics has already approved his plan to divest all assets within 90 days of his confirmation.

Compounding the uncertainty is the unique situation involving Jerome Powell.

Unlike most departing Chairs, Powell has indicated he intends to remain on the Federal Reserve’s governing board until his separate term ends in 2028, or until the perjury investigation is concluded.

This could create an awkward power dynamic where the former Chair sits alongside his successor, a scenario not seen in Washington since the late 1940s.

While US President Donald Trump has threatened to remove Powell from the board entirely, legal experts suggest such a move would be difficult, particularly given recent US Supreme Court precedents relating to the protection of Fed governors from political dismissal.

WASHINGTON — President Trump’s nominee to chair the Federal Reserve said Tuesday that he never promised the White House that he would cut interest rates, even as the president renewed his calls for the central bank to do so.

“The president never once asked me to commit to any particular interest rate decision, period,” Kevin Warsh, a former top Fed official, said under questioning by the Senate Banking Committee. “Nor would I ever agree to do so if he had. … I will be an independent actor if confirmed as chair of the Federal Reserve.”

Warsh’s comments came just hours after Trump, in an interview on CNBC, was asked if he would be disappointed if Warsh didn’t immediately cut rates and responded, “I would.”

The comments underscore the challenge faced by Warsh, 56, a financier and former member of the Fed’s board of governors whom Trump named in January to replace the current Fed chair, Jerome H. Powell. Democrats on the committee accused Warsh of flip-flopping on interest rates over the years, supporting higher interest rates under Democratic presidents and advocating rate cuts during Trump’s time in office. Investors are watching the hearing closely to see how Warsh balances Trump’s demands with worsening inflation, as the war in Iran pushes up the price of gasoline.

Higher inflation typically leads the Fed to raise rates, or at least keep them unchanged, rather than cut them. When the Fed changes its key rate, it can affect mortgages, auto loans and business borrowing.

Yet Warsh’s account was challenged by Sen. Ruben Gallego, an Arizona Democrat, who said that Wall Street Journal reporting last year found that Trump had urged Warsh to reduce borrowing costs.

“Who’s lying here? Is it you or the president?” Gallego asked.

“I think those reporters need better sources,” Warsh responded.

For all the back and forth, the hearing didn’t appear to advance Warsh’s nomination, which has been delayed by a Justice Department investigation into the Fed and Powell, over brief testimony Powell gave last June before the same panel about a building renovation.

Sen. Thom Tillis, a North Carolina Republican on the committee, reiterated Tuesday he wouldn’t vote for Warsh until the investigation is dropped. With the committee closely divided and all Democrats opposed to his nomination, Tillis’ opposition is enough to bottle it up in committee.

“We have got to get rid of this investigation,” Tillis said, “so I can support your nomination.”

Tillis has previously said that all seven Republicans on the committee have signed a letter stating that Powell did not commit a crime when he testified before the panel last June. Federal prosecutors, led by U.S. Atty. Jeanine Pirro, are investigating his testimony for potential perjury, though a judge said last month they offered no evidence to support the charge when he threw out subpoenas Pirro had issued.

Prosecutors from her office as recently as last week sought access to the Fed’s building project but were turned away, revealing that the Trump administration has not reversed course despite opposition from members of his own party that are essential to Warsh’s confirmation.

In his opening remarks, Warsh told the Senate Banking Committee that one of his top goals would be to fight inflation, which remains elevated at 3.3% annually.

“Congress tasked the Fed with the mission to ensure price stability, without excuse or equivocation, argument or anguish,” Warsh said. “Inflation is a choice, and the Fed must take responsibility for it.”

Warsh would be in a tough spot if confirmed. Inflation is worsening, making it much harder for the Fed to implement the interest rate cuts Trump so desperately seeks. The conflict could also slow the economy, as well as hiring. And if Warsh ultimately becomes chair, he may very well find his predecessor, Powell, still sitting on the Fed’s governing board, an uncomfortable arrangement that hasn’t occurred since the late 1940s.

Warsh said the Fed’s political independence is “essential,” and that the central bank wasn’t threatened when “elected officials — presidents, senators, or members of the House — state their views on interest rates.” Trump has repeatedly urged Powell to cut the Fed’s key rate from its current level of about 3.6% to as low as 1%, a view almost no economist shares.

Sen. Elizabeth Warren, a Massachusetts Democrat, said that Trump has not just stated his opinions on rates, but has sought to fire a Fed governor and is investigating Powell.

“The Senate should not be aiding and abetting Donald Trump’s illegal takeover of the Fed by installing his chosen sock puppet as chair,” she said Tuesday.

Warren also noted that Warsh has not disclosed all of his financial holdings, which include investments in startups and private companies, or the size of those financial stakes. For example, Warsh has said he has holdings in SpaceX and Polymarket, but has not said how large those investments are.

Warren charged that Warsh is not in compliance with ethics requirements. Warsh argued that the Office of Government Ethics has signed off on his plan to sell all his assets within 90 days of his confirmation.

The turmoil could make a potential transition from Powell to Warsh an unusually turbulent one for the world’s most pivotal central bank, which has historically experienced smooth transfers of power. Should the change in leadership prove particularly bumpy, it could unnerve markets and lift longer-term interest rates.

Powell’s term as chair ends May 15. He said last month that he would remain as chair until a successor is named. Powell also is serving a separate term as a member of the Fed’s governing board that lasts until January 2028. Fed chairs typically leave the board when their terms as chair end, but Powell said last month he would remain on the board, even if a new chair is approved, until the investigation is dropped.

Trump said he would fire Powell if he attempted to remain at the Fed. Yet Trump’s previous attempt to remove a Fed governor, Lisa Cook, has been tied up in court. During oral arguments in January, a majority of justices on the Supreme Court appeared to lean toward leaving Cook at the Fed.

Rugaber writes for the Associated Press.

Kevin Warsh, United States President Donald Trump’s pick to lead the Federal Reserve, has addressed concerns about his independence pending his appointment to the bank amid fears that Trump could sway his decisions on monetary policy.

On Tuesday, Warsh — who served on the central bank’s Board of Governors from 2006 to 2011 — faced waves of criticism during a confirmation hearing of the Senate Banking Committee where Democrats voiced concerns about the Fed’s independence should he be appointed to lead the organisation.

Senator Elizabeth Warren of Massachusetts, the ranking Democrat on the committee, questioned Warsh’s independence, alleging that he would be a “sock puppet” for Trump, concerns he pushed back against and addressed in his opening testimony.

“I do not believe the operational independence of monetary policy is particularly threatened when elected officials — presidents, senators, or members of the House — state their views on interest rates,” Warsh said.

“Monetary policy independence is essential. Monetary policymakers must act in the nation’s interest . . . their decisions the product of analytic rigour, meaningful deliberation, and unclouded decision-making.”

Warsh, 56, also called for “regime change” at the US central bank, including a new approach for controlling inflation and a communications overhaul that may discourage his colleagues from saying too much about the direction of monetary policy.

Warsh blamed the central bank for an inflation surge after it slashed interest rates to nearly zero in the wake of the COVID-19 pandemic, a move that continues to hurt US households.

Concerned by the implications of artificial intelligence for jobs – expected to increase productivity – and prices, he said he would move quickly to see if new data tools could provide better insight on inflation, and would also discourage policymakers from saying too much about where interest rates might be heading.

“What the Fed needs are reforms to its frameworks and reforms to its communications,” the former Fed governor said. “Too many Fed officials opine about where interest rates should be … That is quite unhelpful.”

Warsh has also long been an advocate for shrinking the Fed’s $6.7 trillion balance sheet. In the Tuesday hearing, he said any such plans would take time and must be publicly discussed well in advance.

Jai Kedia, a research fellow at the Center for Monetary and Financial Alternatives at the libertarian Cato Institute, told Al Jazeera that there were many “encouraging” signs in Warsh’s candidacy.

“Warsh is presenting himself as a regime change candidate at a time when the Fed needs serious reform,” Kedia noted. “Particularly encouraging was his understanding of the negative effects of QE and his focus on reducing the balance sheet. He also correctly criticised mission creep and acknowledged that the Fed did better when it kept its focus on the dual mandate [of keeping inflation at 2 percent and increasing employment].”

Quantitative easing or QE is an unconventional monetary policy under which a central bank lowers interest rates, among other measures, to boost the economy, a step taken by central banks in several developed countries during the pandemic.

Warsh’s private investments, at well over $100m, are also under scrutiny. Among them are two holdings in the Juggernaut Fund LP, apparently part of his work advising for the Duquesne Family Office, the private investment firm of Stanley Druckenmiller.

Warsh’s nearly 70-page financial disclosure also showed that his other holdings include investments in Elon Musk’s SpaceX and the prediction trading platform Polymarket.

“I agreed to divest virtually all of my financial assets, the large majority of which will be divested” before taking office, Warsh said without giving any details.

Warsh noted that selling his holdings comes with challenges. He said that when that process is completed, he would have “virtually no financial assets” and “we’ll be sitting in something like cash”.

Warren, however, questioned him about the divestment plan. “Do we have any way to verify that, in fact, these sales will occur if we have no idea what’s in them?” she asked.

Political hurdles

The hearing quickly turned contentious, and the pace of Warsh’s confirmation process through the Senate remained in doubt.

He would not directly say that Trump lost the 2020 election – a statement of fact that Senator Warren said was a litmus test of Warsh’s independence from the Republican president who nominated him for the top Fed job.

Yet even amidst the focus on independence, Warsh needs 13 votes to clear the 24-member Senate Banking Committee.

North Carolina Senator Thom Tillis said he would vote against Trump’s nominee and join Democrats, which would create a 12–12 split. The committee has 13 Republican members and 11 Democrats.

Tillis said he would not vote for any Trump nominee until an investigation into current Fed Governor Jerome Powell, whose term ends May 15, is either concluded or called off. Last month, federal prosecutors said they found no evidence of wrongdoing. But Jeanine Pirro, the US Attorney for the District of Columbia, has not indicated that the investigation will be dropped.

Tillis said on Tuesday that he would support Warsh’s nomination once the probe into Powell is dropped.

“Today’s confirmation hearing underscored that Warsh is aiming for independence with guardrails,” noted Selma Hepp, chief Economist of Cotality, a market analytics company. “He rejected being a political ‘sock puppet’ and argued the Fed protects its autonomy by ‘staying in its lane.’ He offered no pre-commitment on rates, while emphasising inflation discipline, a large balance sheet, and a desire for clearer Fed communication.”

Noel Dixon, senior macro strategist at State Street, said that with Warsh, the US would have a “dovish-leaning Fed”.

“When a senator asked him if he would lower rates to 1 percent – I guess Trump had indicated that he would like to have rates below 2 percent – Warsh didn’t really say no to that,” Dixon noted. “He didn’t say that it would increase prices. He kind of leaned on it and said there would be a lagged effect, and he was just very noncommittal to that. So it’s almost like – just reading between the lines – he’s giving himself space to maintain possible justification for rate cuts by the end of the year.”

Trump has continued to pressure the central bank.

On Tuesday, he said he would be “disappointed” if the Fed did not lower interest rates.

Tuesday’s remarks follow comments in December, when the US president said he would not appoint anyone to lead the central bank unless they agreed with him.

“The public needs to know whether Mr. Warsh will have the courage of his convictions or if he’s willing to compromise his independence and accommodate more Wall Street deregulation,” Graham Steele, an academic fellow at the Rock Center for Corporate Governance at Stanford University, told Al Jazeera in an email.

Warsh has praised the administration for its push for increased bank deregulation. In a November 2025 op-ed for the Wall Street Journal, Warsh claimed that Trump’s “deregulatory agenda” is “the most significant since President Ronald Reagan’s”.

WASHINGTON — Federal prosecutors made an unannounced visit this week to a construction site at Federal Reserve headquarters that is the focus of an investigation into a $2.5-billion renovation project, according to two people familiar with the visit.

Two prosecutors and an investigator from U.S. Atty. Jeanine Pirro’s office were turned away on Tuesday by a building contractor and referred to Fed attorneys, one of the people said. The two people familiar with the visit spoke on condition of anonymity because they weren’t authorized to publicly discuss an ongoing investigation.

The visit underscores that the Trump administration is not backing down from its investigation of the Fed and its chair, Jerome Powell, even though the probe has delayed the confirmation of a new chair nominated by President Trump. The investigation is focused on cost overruns and brief testimony about the project last summer by Powell. Trump confirmed in an interview that aired Wednesday on Fox Business that he wants to continue the probe.

Last month, during a closed-door hearing before a federal judge, a top deputy from Pirro’s office conceded that they hadn’t found any evidence of a crime in their investigation of the headquarters project.

Robert Hur, an attorney for the Federal Reserve board of governors, sent an email to Pirro’s prosecutors about their visit and their request for a “tour” to “check on progress” at the construction site. Hur’s email, which the Associated Press has viewed, noted that U.S. District Judge James Boasberg concluded that their interest in the Federal Reserve’s renovation project was “pretextual.”

“Should you wish to challenge that finding, the courts provide an avenue for you; it is not appropriate for you to try to circumvent it,” Hur wrote.

Republican Tillis is key vote

Sen. Thom Tillis, a North Carolina Republican who is a key member of the Senate Banking Committee, has vowed to vote against Kevin Warsh, Trump’s nominee to replace Powell as Fed chair, until the investigation is dropped. With the committee closely divided on partisan lines, Tillis’ opposition is enough to block Warsh.

The Banking panel said Tuesday that it will hold a hearing on Warsh’s nomination April 21. Powell’s term as Fed chair ends May 15, but Powell said last month he would remain as chair until a replacement is named.

Powell is serving a separate term as a member of the Fed’s governing board that lasts until January 2028. Chairs typically leave their posts as governor when their terms as chair end, but they can remain on the board if they choose.

Last month, Powell said, “I have no intention of leaving the Board until the investigation is well and truly over, with transparency and finality.” If he remains in his seat, even after Warsh is confirmed, it would deny Trump the oppotunity to fill a seat on the seven-member board.

Late Tuesday, Tillis posted a link on social media to the Wall Street Journal’s article on the visit below an image of the Three Stooges and wrote, “The U.S. Attorney’s Office for D.C. at the crime scene.”

Investigation centers on building renovations

The investigation by Pirro’s office centers on an appearance by Powell before the Senate Banking Committee last June, when he was asked about cost overruns on the Fed’s extensive building renovations. The most recent estimates from the Fed suggest the current estimated cost of $2.5 billion is about $600 million higher than a 2022 estimate of $1.9 billion.

“It is probably corrupt, but what it really is, is incompetent,” Trump said on Fox Business. “Don’t you think we have to find out what happened there?”

The president’s support for the investigation threatens a time frame set out by Sen. Tim Scott, a South Carolina Republican who chairs the Banking Committee. Scott said Tuesday on Fox Business that he believed the investigation would be “wrapped up in the next few weeks,” allowing Warsh to be confirmed soon after.

Threat to fire Powell

News of the unannounced visit by prosecutors comes as Trump has again threatened to fire Powell, if the Federal Reserve chair decides to stay on the central bank’s governing board after his term as chair expires next month.

“Well then I’ll have to fire him, OK?” Trump said when reminded that Powell has said he won’t leave the Fed while the Justice Department investigates a $2.5-billion renovation project at the bank. Powell has also said he will remain as chair of the Fed’s rate-setting committee until a replacement is confirmed by the Senate, following the precedent of previous chairs.

Trump has for months wanted to remove Powell as chair of the Fed, saying he has been too slow in orchestrating interest rate cuts that would give the U.S. economy a quick boost. Powell has said the investigation is a pretext to undermine the Fed’s independence to set rates.

Supreme Court weighing another Trump removal

Trump’s threat to fire Powell comes as the Supreme Court is weighing the president’s effort to remove another central bank governor, Lisa Cook. Lower courts have so far allowed Cook to remain in her job while her legal challenge to the firing continues. The Supreme Court also seemed likely to keep her on the Fed when the court heard arguments in January. A decision could come any time.

The issue in Cook’s case is whether allegations of mortgage fraud, which she has denied, is a sufficient reason to fire her or a mere pretext masking Trump’s desire to exert more control over U.S. interest rate policy.

The Supreme Court has allowed the firings of the heads of other governmental agencies at the president’s discretion, with no claim that they did anything wrong, while also signaling that it is approaching the independence of the nation’s central bank more cautiously, calling the Fed “a uniquely structured, quasi-private entity.”

Kunzelman and Rugaber write for the Associated Press. AP Writer Mark Sherman contributed to this report.

April 3 (UPI) — A federal judge on Friday refused a Department of Justice request for him to reconsider his earlier ruling to block grand jury subpoenas it issued to Fed Chairman Jerome Powell.

U.S. District Judge James Boasberg on Friday said he would not lift his block on subpoenas that the Justice Department issued to board of the Federal Reserve regarding the $2.5 billion renovation of the Fed’s complex in Washington, D.C.

The judge had previously blocked the subpoenas because, he said, they had nothing to do with a Justice Department probe about the renovations, but rather were intended to pressure Powell into adjusting interest rates, as President Donald Trump had been chiding him to do for months.

“On March 11, 2026, this Court issued a Memorandum Opinion and Order that quashed the Government’s subpoenas directed to the Board of Governors of the Federal Research System,” Boasberg wrote in a response to the Justice Department request that was filed on Friday.

“The Government promptly moved for reconsideration of that decision,” he wrote. “As its cursory brief neither offers new evidence nor points to any material error, the Court will deny the Motion.”

The DOJ launched its criminal investigation into the Fed’s renovation budget, which Powell at the time called “pretexts” to punish him for not setting interest rates based on Trump demands.

Boasberg, in his response to the Justice when he blocked the subpoenas said that the government “has produced essentially zero evidence to suspect Chair Powell of a crime.”

The Justice Department later acknowledged when appealing Boasberg’s quashing of the subpoenas that it did not have evidence that a crime had been committed, instead saying that there were “1.2 billion reasons for us to look into it.”

A United States federal judge has once again batted down a pair of subpoenas from the administration of President Donald Trump seeking information about Jerome Powell, the chairman of the Federal Reserve, the country’s central bank.

In a brief, six-page opinion published on Friday, Judge James Boasberg rejected the Department of Justice’s motion to reconsider his earlier ruling rejecting the subpoenas.

“The Government’s arguments do not come close to convincing the Court that a different outcome is warranted,” Boasberg wrote.

On March 13, Boasberg, a judge for the federal court in the District of Columbia, nullified the subpoenas on the basis that they were issued for an “improper purpose”: to pressure Powell into compliance with the president’s demands.

Trump and Powell — an appointee from the president’s first term — have been at loggerheads since the Republican leader returned to the White House in January 2025.

Although the Federal Reserve is an independent government agency, not subject to political demands, Trump has repeatedly called on the bank to slash interest rates, and he has denounced Powell as “incompetent”, “crooked” and a “fool” for not following suit.

For months, pressure had been building from the Trump White House to investigate Powell and push him prematurely from his job as Federal Reserve chair. Powell’s term is slated to expire in May.

Much of the Trump administration’s focus has fallen on renovations to the Federal Reserve’s historic 1930s buildings in Washington, DC, which have gone over budget.

The administration has pointed to the cost overruns as evidence of malfeasance.

Last July, for instance, Trump appointee William Pulte called on Congress to investigate Powell for “political bias” and “deceptive” testimony related to the renovation project.

The following month, Trump posted on his platform Truth Social that he was considering “a major lawsuit against Powell” in response to “horrible, and grossly incompetent” work on the renovations.

The pressure reached a climax on January 11, when Powell made a rare statement announcing he was under a Justice Department investigation over the renovation project. He dismissed the probe as a “pretext” to undermine the Federal Reserve’s leadership over monetary policy.

“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,” Powell said.

The Federal Reserve has since sought to have the subpoenas into Powell’s behaviour tossed.

Boasberg sided with the central bank in his initial ruling, and in Friday’s opinion, he called the Trump administration’s efforts to change his mind insufficient.

The Justice Department had argued that it does not need to produce evidence of a crime to seek a grand jury subpoena.

Boasberg agreed with that point, but he said subpoenas were also subject to a legal standard that bars them from being issued for “improper” purposes.

“The subpoena power ‘is not unlimited’ and may not be abused,” Boasberg wrote, citing court precedent.

He therefore ruled that the lack of evidence overall against Powell was relevant to the legality of the subpoenas.

“The controlling legal question is what these ‘subpoena[s’] dominant purpose’ is: pressuring Powell to lower rates or resign, or pursuing a legitimate investigation opened because the facts suggested wrongdoing,” Boasberg said.

“Resolving that question requires probing whether the Government’s asserted basis for the subpoenas — suspicions of fraud and lying to Congress — is colorable or tenuous. That inquiry, in turn, means asking how much evidence there is to back up the Government’s assertions.”

Boasberg underscored that he has seen no suggestion that Powell committed criminal wrongdoing and pointed to the long list of statements Trump has made attacking the Federal Reserve chair, suggesting an ulterior motive.

“The Government’s fundamental problem is that it has presented no evidence whatsoever of fraud,” he concluded.

Friday’s ruling is likely to set the stage for the Trump administration to appeal. US Attorney Jeanine Pirro has previously denied any political motivation for the investigation.

She has also asserted that Boasberg is “without legal authority” to nullify the subpoenas.

The United States Federal Reserve will hold interest rates steady as the labour market cools and prices on goods and services surge following the US and Israel’s joint strikes on Iran.

The central bank will maintain its benchmark rate at 3.5–3.75 percent, consistent with the Fed’s decision last month, when it also held rates steady.

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The implications of developments in the Middle East for the US economy are uncertain,” the central bank said in a statement announcing its policy decision and referring to its Federal Open Market Committee.

“The Committee is attentive to the risks to both sides of its dual mandate.”

Holding rates steady was in line with estimates. CME FedWatch, a tool that tracks monetary policy decisions, forecast that there was a 99 percent chance that rates would hold steady.

The stall comes after three rate cuts in 2025.

Global gripes

Consumers are also facing the repercussions of US President Donald Trump’s trade and military policies in their daily expenses.

“Despite meaningful progress on inflation in 2024, Trump’s tariffs have stalled progress and kept inflation persistently above the Fed’s target. Wholesale prices are running hot as service prices surge, and now, Trump’s war in Iran is rocking commodity markets around the globe,” Elizabeth Pancotti, managing director of policy and advocacy at Groundwork Collaborative, an economic think tank, said in comments provided to Al Jazeera.

Last month, the US Supreme Court ruled against the president for his use of the International Emergency Economic Powers Act (IEEPA). The high court said the president exceeded his authority and that the tariffs imposed under that order must be refunded. However, the president then imposed new tariffs not covered by IEEPA.

The White House announced a 15 percent tariff through Section 122, which allows the president to impose tariffs for 150 days. Those changes were reflected in the producer price index report released by the US Department of Labor’s Bureau of Labor Statistics on Wednesday.

Wholesale prices rose by 0.7 percent for the month, marking the biggest one-month surge in a year. Goods prices rose 1.1 percent overall after tumbling for two months. Energy prices rose by 2.3 percent, with the cost of gas or petrol rising by 1.8 percent. Those costs are expected to get higher as tensions rise in the Strait of Hormuz following joint US-Israel strikes on Iran in late February and the subsequent retaliation.

“In the near term, higher energy prices will push up overall inflation; however, it is too soon to know the scope and duration of the potential effects on the economy,” Fed Chair Jerome Powell told reporters.

In the last month, petrol prices have jumped for US consumers. The average price for a gallon of regular gasoline is $3.84, up from $2.92 this time last month.

“The Fed’s inflation worries extend beyond weathering a fleeting wave of one-off price hikes associated with tariffs and, more recently, an energy price spike,” Stephen Stanley, chief US economist at Santander US Capital Markets, told the Reuters news agency.

Labour market stalls

Holding rates steady also comes as the job market stagnates. The latest jobs report, which was released earlier this month, showed that the US economy lost 92,000 jobs, with unemployment rising to 4.4 percent.

Meanwhile, the Job Openings and Labor Turnover Survey, or JOLTS report, which came out last week, showed 6.9 million open jobs in the US, unchanged from the month prior. That shows that employer hiring has stalled and that those who have jobs are seldom leaving for new ones.

“This might be one of the toughest moments in recent memory for the Federal Reserve’s Open Market Committee,” Michael Linden, Senior Policy Fellow at the Washington Center for Equitable Growth, said in remarks provided to Al Jazeera. “Recent data has revealed that economic growth in the back half of last year was extremely weak, the labour market seems to be on the precipice of disaster, and prices keep rising faster than anyone feels comfortable with.”

Political undercurrents

Wednesday’s decision is the second-to-last one of current Fed Chair Powell, whose term is up in May. Powell, who was first appointed by Trump during his first administration, has been a target of Trump’s scorn and criticisms for not cutting interest rates fast enough.

“When is ‘Too Late’ Powell lowering INTEREST RATES?” Trump posted on his social media platform Truth Social on Wednesday morning ahead of the decision.

Previously, Trump said he would not nominate someone to lead the central bank unless the nominee agreed with his position.

“Anybody that disagrees with me will never be the Fed Chairman!” Trump said in a post on Truth Social in December.

“We at the Fed will continue to do our jobs with objectivity, integrity and deep commitment to serve the American people,” Powell told reporters.

Trump’s nominee to succeed Powell, Kevin Warsh, has his nomination in flux as Republican Senator Thom Tillis said he would not vote to advance any of Trump’s nominees to the central bank until a criminal probe into the current chairman, Powell, is closed.

Tillis sits on the Senate Banking Committee, which vets nominees for the central bank, including Warsh. He said he will not approve Trump’s Fed nominees until the probe of Powell is closed. The criminal probe of Powell centres on Fed building renovations after a judge quashed grand jury subpoenas and called the investigation a pretext to pressure the central bank to lower interest rates.

If Warsh has not been confirmed by the Senate in time for the Fed’s June 16–17 meeting, Powell would continue to lead the rate-setting Federal Open Market Committee.

“If my successor is not confirmed by the end of my term as chair, I would serve as chair pro tem until he is confirmed. That is what the law calls for,” Powell said.

“On the question of whether I will leave while the investigation is ongoing, I have no intention of leaving the board until the investigation is well and truly over with transparency and finality.”

March 18 (UPI) — The Federal Reserve announced that it is leaving its benchmark interest rate untouched Wednesday in its first Federal Open Market Committee statement since the start of the war with Iran.

The Fed’s benchmark interest rate remains at a 3.5% and 3.75% range as the committee held on to its projection of at least one rate cut coming this year.

“Available indicators suggest that economic activity has been expanding at a solid pace,” the FOMC statement said. “Job gains have remained low and the unemployment rate has been little changed in recent months. Inflation remains somewhat elevated.”

As for the war in Iran, the statement said its impact on the U.S. economy is “uncertain.”

The Fed continues to pursue monetary policies it believes will bring the rate of inflation down to 2%. In its statement it said it is “committed to supporting maximum employment,” in pursuit of its target.

Economic reports that inform the Fed’s decision have indicated pressures from inflation remain and economic growth has slowed.

Wednesday’s announcement comes on the heels of a producer price index report earlier in the day that showed the largest increase to the index for final demand goods since August 2023.

Last week, the U.S. Bureau of Labor Statistics reported that nonfarm payrolls fell by 92,000 in February. The unemployment rate increased to 4.4%.

These reports have economists and traders cooling on the potential for interest rate cuts. Eugenio Aleman, chief economist at Raymond James, said in a statement that the wholesale inflation report on Wednesday, “likely reinforces a hold decision.”

Data from the producer price index report predates the beginning of the war with Iran.

March 13 (UPI) — A federal judge this week quashed subpoenas the Department of Justice had issued to Federal Reserve Chair Jerome Powell because they were issued to pressure him into adjusting interest rates.

Judge James Boasberg redressed the DOJ for the subpoenas, saying that their purpose had nothing to do with a probe about renovations at the Federal Reserve in Washington, D.C.

The DOJ in January launched a criminal investigation into Powell’s testimony last year about the renovations, which Powell at the time said were “pretexts” to punish him and the Fed after they did not set interest rates at levels demanded by President Donald Trump.

“The Government has produced essentially zero evidence to suspect Chair Powell of a crime; indeed, its justifications are so thin and unsubstantiated that the Court can only conclude that they are pretextual,” Boasberg wrote in the opinion.

The department in January issued grand jury subpoenas in reference to Powell’s comments about the multi-year project to renovate the Fed’s office buildings during his June 2025 testimony before the Senate Banking Committee.

During a tour of the renovations, Powell disputed Trump’s over-estimates of the renovation’s cost, and threatened to sue him for the “horrible and grossly incompetent job” Powell had done on the project.

Overall, however, Trump has repeatedly ripped into and mused about firing Powell, which he cannot do, because the Fed chair has repeatedly said that interest rate changes would be dictated by only the market, rather than the preferences of any one person.

In the opinion, which was unsealed Friday, Boasberg said he blocked the subpoenas because “a mountain of evidence suggests that the Government served these subpoenas on the Board to pressure its Chair into voting for lower interest rates or resigning.”

WASHINGTON — A federal judge on Friday quashed Justice Department subpoenas issued to the Federal Reserve in January, a severe blow to an investigation that has already attracted strong criticism on Capitol Hill.

Judge James Boasberg said that a “mountain of evidence suggests” that the purpose of the subpoenas was simply to pressure the Fed to cut its key interest rate, as President Trump has repeatedly demanded.

Fed Chair Jerome Powell revealed the investigation Jan. 11, prompting Senator Thom Tillis, a North Carolina Republican to block consideration of Trump’s pick to replace Powell as Fed chair when his term expires May. 15.

Rugaber writes for the Associated Press.