Ten former US economic policy leaders, including ex-Federal Reserve chairs Janet Yellen, Ben Bernanke and Alan Greenspan, issued a joint statement on Monday, 12 January 2026 condemning the Department of Justice’s criminal investigation into current chair Jerome Powell. They described the move as unprecedented and said any perception of political interference would undermine the Federal Reserve’s ability to deliver stable prices and employment.
The signatories, drawn from both Republican- and Democratic-appointed administrations, argued that independence-and the public’s confidence in it-is essential to economic performance. They warned that pursuing criminal action over disagreements related to monetary policy mirrors practices in countries with weaker institutions and risks adverse outcomes for inflation and market functioning.
Their intervention followed Powell’s unscheduled video address on Sunday, 11 January, in which he disclosed that Justice Department prosecutors had served the Federal Reserve with subpoenas and threatened a criminal indictment connected to his testimony to a Senate committee about building renovation projects. Powell called the investigation unprecedented and said he believed it reflected frustration within the White House over the pace of interest‑rate reductions.
The Fed cut its policy rate three times in the second half of 2025, bringing the target range to 3.50–3.75 per cent, the lowest level in three years. President Donald Trump has repeatedly urged faster and deeper reductions to lower federal debt‑servicing costs and ease borrowing for households and firms, while Powell has emphasised that decisions will continue to be data‑driven.
Powell characterised the probe as part of wider pressure on the central bank, arguing that persistent threats risk diluting expectations of operational autonomy. Under the Federal Reserve Act, governors serve long, staggered terms to protect policy from day‑to‑day political demands, and confidence in that structure is central to the institution’s effectiveness.
Trump said he was unaware of the investigation, and the Justice Department did not comment when approached by reporters. With prosecutors yet to specify any prospective charges, the legal basis of the inquiry remains unclear beyond Powell’s reference to his congressional testimony.
Yellen, who served as Fed chair before Powell and later as Treasury Secretary, told CNBC the development was “extremely chilling” and said she saw no reason to doubt Powell’s candour. She cautioned investors that explicit political direction of interest rates would push the United States towards practices associated with less stable economies.
Attention is also turning to succession, with Powell’s term as chair due to end in May. Senator Thom Tillis, a Republican member of the Senate Banking Committee, said he would oppose consideration of a replacement or any other Federal Reserve Board nominee until the legal matter is resolved, signalling potential delays to confirmation timetables.
Initial market reaction was muted. By early afternoon on Monday the S&P 500 was roughly flat, contrasting with episodes in 2025 when markets moved on perceived threats to central bank independence. Macquarie Group’s Thierry Wizman said the limited reaction suggested traders currently see constraints on the White House’s ability to drive policy outcomes.
For policy teams, the practical questions now are procedural. If prosecutors escalate, senior Federal Reserve time will be diverted to legal responses while the policy cycle continues; if the White House advances a nominee quickly, the Senate calendar and committee posture will set the pace. Either route carries governance consequences, and any erosion of perceived independence typically lifts term premia and complicates efforts to anchor inflation expectations.