Donald Trump has been forced into a humiliating retreat after a criminal investigation into Federal Reserve Chairman Jerome Powell was abruptly shut down, a dramatic reversal that could open the door to interest rate cuts.
In a sudden move, Washington DC’s top federal prosecutor, Jeanine Pirro, confirmed she had directed her office to close its investigation into Powell, according to a post on X. The probe had centered on alleged cost overruns in a $2.5 billion renovation of the Fed’s Washington headquarters. The case will now be handed to the central bank’s internal watchdog instead.
The decision marks a dramatic climbdown after weeks of legal setbacks and mounting political pressure. Crucially, it removes the biggest obstacle to installing Trump’s pick to lead the Fed, Kevin Warsh. Republican Senator Thom Tillis had made clear he would block Warsh’s nomination while the investigation was ongoing, warning it risked undermining the independence of the central bank. That blockade left the White House stuck, unable to push its preferred candidate through while the probe hung over Powell.
Warsh is considered likely to meet Trump’s demands to cut interest rates. This is a breaking news story, more to follow.
