President Donald Trump on Thursday signaled continued support for a Department of Justice investigation into Federal Reserve Chair Jerome Powell, a move that could keep the very leader he wants gone in power through 2028. The probe, which centers on comments Powell made about a $2.5 billion building renovation, has stalled the confirmation of Trump’s own nominee to replace him, Kevin Warsh, according to CNBC.
- Trump’s DOJ probe into Powell has backfired by stalling Kevin Warsh’s confirmation as the next Fed chair, with Republican Sen. Thom Tillis blocking the nomination until the investigation ends.
- Powell stated on March 18, 2026, that he has “no intention of leaving the board until the investigation is well and truly over, with transparency and finality.”
- The Fed held rates steady at 3.5% to 3.75% this week, and only 12 of 19 officials project at least one rate cut in 2026, leaving borrowing costs elevated for businesses.
How the DOJ Probe Into Powell Unfolded
U.S. Attorney for the District of Columbia Jeanine Pirro opened an investigation into brief comments Powell made before the Senate Banking Committee in June 2025 about the Fed’s headquarters renovation project. Pirro’s office issued two grand jury subpoenas to the Federal Reserve in January 2026 seeking documents related to the $2.5 billion renovation, according to court filings reviewed by multiple outlets.
U.S. District Judge James Boasberg threw out both subpoenas earlier this month, writing that “there is abundant evidence that the subpoenas’ dominant (if not sole) purpose is to harass and pressure Powell either to yield to the President or to resign and make way for a Fed Chair who will.” Pirro has vowed to appeal the ruling, and Trump signaled on Thursday that he supports continuing the investigation.
Powell has called the probe an “intimidation” tactic in Trump’s long-running pressure campaign to force the Fed to cut interest rates. The Fed held its benchmark rate at 3.5% to 3.75% at its March meeting, citing rising inflation driven by oil prices and geopolitical uncertainty from the Iran conflict.
Why Warsh’s Confirmation Is Stuck
The unintended consequence of the probe is that it has frozen the confirmation process for Kevin Warsh, Trump’s pick to succeed Powell. Republican Sen. Thom Tillis of North Carolina, who sits on the Senate Banking Committee, has repeatedly called the investigation “bogus” and vowed to block Warsh’s nomination from advancing until the DOJ drops the case.
With all Democrats expected to oppose Warsh and Tillis withholding his vote, the banking committee cannot advance the nomination to a full Senate vote. As of this week, Warsh’s confirmation process had not progressed beyond a meet-and-greet phase. Warsh previously served as a Federal Reserve Governor from 2006 to 2011 and was a key advisor during the financial crisis under then-Chair Ben Bernanke.
What This Means for Business Owners and Borrowing Costs
The leadership standoff at the Fed matters directly for entrepreneurs and small business owners because it removes any near-term possibility of a policy shift toward lower interest rates. New projections from the March meeting showed that only 12 of 19 Fed officials anticipate at least one rate cut this year, while seven expect rates to hold steady through all of 2026. Strategists at Macquarie have gone further, arguing that inflationary pressures from tariffs and oil prices could force the Fed to raise rates.
Powell’s chair term formally ends on May 15, 2026, but his seat on the Fed’s Board of Governors does not expire until January 2028. By refusing to resign, Powell retains a vote on interest rate decisions and denies Trump the ability to fill another seat on the board. The JFK Library Foundation plans to award Powell its Profile in Courage award on May 31, 2026, a signal of how his resistance to political pressure has been received.
Frequently Asked Questions
Why Is the DOJ Investigating Federal Reserve Chair Jerome Powell?
The Department of Justice, led by U.S. Attorney Jeanine Pirro, opened a probe into brief comments Powell made before the Senate Banking Committee in June 2025 about the Fed’s $2.5 billion headquarters renovation. A federal judge ruled the subpoenas were issued to harass and pressure Powell into resigning.
What Happens to Interest Rates if Powell Stays at the Fed?
The Fed held its benchmark rate at 3.5% to 3.75% in March 2026, and only 12 of 19 officials project at least one rate cut this year. Powell’s continued leadership signals no dramatic shift in monetary policy, meaning borrowing costs for businesses are unlikely to fall sharply in the near term.
When Does Jerome Powell’s Term as Fed Chair End?
Powell’s term as chair formally ends on May 15, 2026, but his seat on the Fed’s Board of Governors does not expire until January 2028. Powell has stated he will remain on the board until the DOJ investigation concludes.
