Summary
A federal judge delivered a sweeping rebuke to a Justice Department investigation targeting the head of the U.S. central bank, ruling that prosecutors improperly sought to use grand jury subpoenas against Jerome Powell, the chairman of the Federal Reserve.
In a decision unsealed Friday, U.S. District Judge James Boasberg blocked subpoenas issued to the Federal Reserve’s Board of Governors, concluding that prosecutors failed to show evidence Powell committed a crime and instead appeared to be attempting to pressure the central bank over monetary policy.
The ruling marks a major legal setback for the investigation launched by Jeanine Pirro, who immediately announced that the Department of Justice will appeal the decision.
Judge: Investigation aimed at pressuring Powell
In his opinion, Boasberg wrote that the evidence presented in court strongly suggested the investigation was motivated by a desire to force Powell to either lower interest rates or step down.
According to the ruling, the government failed to produce credible evidence that Powell committed any crime. Instead, the judge concluded that the subpoenas appeared to be a tool intended to pressure the central bank’s leadership.
The investigation had reportedly focused on the Federal Reserve’s multibillion-dollar renovation of its headquarters in Washington and Powell’s testimony before Congress about the project.
But the judge said prosecutors did not provide sufficient proof that Powell misled lawmakers or engaged in fraud.
The court concluded the subpoenas served “an improper purpose” and therefore could not stand.
Justice Department vows appeal
Pirro strongly criticized the ruling during a news conference shortly after the decision became public.
She called the court’s action “outrageous,” arguing that it improperly interfered with the work of a grand jury.
According to Pirro, the Justice Department’s investigation was focused on determining whether Powell had made false statements to Congress about the headquarters renovation project.
She said the department will appeal the ruling, insisting the case is about legal accountability and not politics.
Trump administration’s pressure on the Fed
The case has unfolded against the backdrop of a growing conflict between the White House and the Federal Reserve.
President Donald Trump has repeatedly criticized Powell for refusing to aggressively cut interest rates, arguing that lower borrowing costs would boost economic growth.
The Federal Reserve, however, operates as an independent institution and traditionally resists political pressure over monetary policy decisions.
Powell has largely avoided responding publicly to the president’s criticisms, but earlier this year he released a rare statement defending the Fed’s independence after the investigation became public.
Ruling may delay leadership change at the Fed
The legal battle could also complicate plans to replace Powell as Fed chair.
Trump has nominated former Federal Reserve governor Kevin Warsh to lead the central bank after Powell’s term ends.
However, Republican Senator Thom Tillis has said he will block Warsh’s confirmation while the investigation into Powell remains unresolved.
Because the Senate Banking Committee is narrowly divided, Tillis’ opposition could prevent Warsh’s nomination from advancing to a full Senate vote.
The judge’s ruling — and the Justice Department’s planned appeal — could therefore prolong Powell’s tenure as chair until his term expires in May.
Economic uncertainty adds pressure
The legal fight comes at a delicate moment for U.S. monetary policy.
Rising energy prices linked to escalating geopolitical tensions in the Middle East have complicated the economic outlook, potentially making it harder for policymakers to cut interest rates in the near term.
Higher oil prices can drive inflation, which may force the Federal Reserve to maintain tighter monetary policy longer than the White House would prefer.
What happens next
The Justice Department’s appeal means the case is far from over. But for now, the ruling halts the investigation’s subpoenas and shields Powell from further grand jury demands.
More broadly, the dispute underscores a growing debate in Washington over the independence of the Federal Reserve — a principle many economists consider essential for maintaining stability in the U.S. financial system.
