Federal Reserve Chair Jerome Powell released a video statement Sunday night accusing the Trump administration of pressuring the central bank through actions taken by the Department of Justice, marking an unusual and highly public escalation of tensions between the White House and the Federal Reserve. In the video, Powell said the Fed had received subpoenas on Friday tied to a grand jury investigation and had been threatened with potential criminal charges related to renovations of the Federal Reserve’s headquarters in Washington, DC, as well as his testimony to a Senate panel last year. Powell characterized those inquiries as “pretexts” and said their underlying purpose was to undermine the independence of the central bank.
The timing and format of Powell’s statement drew immediate attention. The two-minute video was released shortly before the opening of Asian financial markets, ensuring that global investors encountered the allegations at the start of the trading week. The claims themselves were significant, as Powell accused the administration not only of seeking to influence monetary policy but of using federal law enforcement mechanisms to do so. President Donald Trump and Jerome Powell were last publicly seen together on July 24, 2025, when they toured the Federal Reserve’s renovation project in Washington, DC.
Despite the gravity of the accusations, market reactions were muted. Futures initially suggested modest declines, with the Dow Jones Industrial Average and the S&P 500 projected to fall by roughly half a percentage point and the Nasdaq Composite slightly more. By midday Monday, those declines had reversed, and major indexes were trading higher. The S&P 500 closed the day at a new all-time high, indicating that investors were not pricing in immediate disruption to Federal Reserve operations or monetary policy.
The dispute quickly moved into the political arena. Powell’s video was widely interpreted by commentators as a warning that the administration was attempting to exert improper control over the central bank. At the same time, questions emerged about the practical implications of such an effort, given that Powell’s current term as chair is scheduled to expire in five months. He has only three remaining Federal Open Market Committee meetings as chair, though he could remain on the Federal Reserve Board as a governor until 2028.
The structure of the Federal Reserve and the confirmation process adds complexity to the situation. Any new chair must be confirmed by the Senate, and there is no provision in the Federal Reserve Act allowing the president to appoint an acting chair without Senate approval. If a nominee is not confirmed, leadership responsibilities fall to the vice chair during a temporary “absence” of the chair. That position is currently held by Philip Jefferson, a Biden appointee with an academic background who joined the Fed after a career in higher education.
Some analysts have noted that if Powell were to leave before a successor is confirmed, the resulting leadership uncertainty could complicate decision-making at the central bank. There is precedent for the Fed board electing a chair pro tempore when a chair’s term expires before confirmation of a replacement. When Powell’s first term ended in February 2022, the board selected him to serve in that capacity until he was confirmed again in May. However, that arrangement occurred after President Biden had already announced his intention to reappoint Powell, reducing controversy at the time.
The current circumstances differ, and any attempt to extend Powell’s leadership without Senate confirmation could prompt legal challenges. The Federal Reserve Act authorizes a chairman pro tempore only when both the chair and vice chair are absent, leaving ambiguity about how extended vacancies should be handled. This uncertainty has heightened attention on the Senate’s role in confirming a successor.
Sen. Thom Tillis (R-NC) responded to Powell’s video by stating that he would block any nominee to replace Powell until the investigation is resolved. Sen. Lisa Murkowski (R-AK) also said she would block the administration’s nominations pending the outcome of the inquiry, stating it is “clear the administration’s investigation is nothing more than an attempt at coercion.” Under the Constitution and federal law, the Senate’s advice and consent authority gives it leverage over appointments, including those at the Federal Reserve.
The scope of that leverage, however, may be limited in practice. A 1978 Office of Legal Counsel memo concluded that statutory language directing the vice chair to preside during a chair’s “absence” does not clearly apply to a permanent vacancy. The memo suggested that, in the absence of an explicit succession mechanism, the president may designate a sitting governor as acting chair until a nominee is confirmed. If applied, that interpretation could allow the White House some flexibility, though the effectiveness of any acting chair would still depend on cooperation from the broader Federal Reserve Board and the FOMC.
President Trump has denied any involvement in the investigation described by Powell. In an interview with NBC News on Sunday night, Trump said he was unaware of the subpoenas and that any criminal inquiry was unrelated to his disagreements with Powell over interest rates. The Fed began cutting rates in September, aligning policy more closely with the direction Trump had advocated earlier in the year.
Questions also remain about the origin of the investigation itself. A Bloomberg report, citing anonymous sources, said Federal Housing Finance Agency Director Bill Pulte was the “driving force” behind the decision to subpoena Powell. Pulte has previously scrutinized Federal Reserve officials, including raising allegations related to mortgage disclosures by Fed Governor Lisa Cook and referring those concerns to the Justice Department.
At the center of the dispute is whether the investigation reflects political pressure or a routine application of federal law. Powell has framed the matter as a fundamental challenge to central bank independence, while others note that the Department of Justice retains authority to investigate potential legal violations, including allegations of false statements to Congress. As of now, no charges have been announced, and the administration has denied using the Justice Department to influence monetary policy.
Financial markets appeared to take a wait-and-see approach. Trading on Monday suggested investors were not anticipating immediate changes to Federal Reserve leadership or its policy framework. The episode has nonetheless placed renewed focus on the balance between executive authority, congressional oversight, and the institutional independence of the nation’s central bank, issues that historically carry significant implications for economic governance and public confidence.
