Jerome Powell Faces Federal Investigation as Markets Turn Defensive

Global financial markets opened the week in cautious mode as US authorities confirmed a criminal inquiry into Federal Reserve Chair Jerome Powell, raising fresh concerns about the independence of America’s central bank.

According to officials in Washington, federal prosecutors are investigating Powell over the costly renovation of the Federal Reserve’s headquarters and whether his testimony to Congress accurately reflected the project’s scale and expenses. The inquiry was approved late last year by the US attorney’s office in Washington, led by Jeanine Pirro.

Powell confirmed that the Federal Reserve had been served with grand jury subpoenas from the Department of Justice. He warned that the investigation should be viewed in the broader context of ongoing political pressure on monetary policy.

Financial markets reacted quickly. The US dollar weakened, gold surged to record levels, and investors increased positions in silver and the Swiss franc. Stock futures in the United States and Europe moved lower as traders shifted into defensive assets ahead of inflation data and the start of earnings season.

Asian markets showed early resilience. Hong Kong’s Hang Seng rose more than 1 percent, Shanghai gained nearly 1 percent, and Australia’s ASX 200 posted moderate gains. Japanese markets remained closed for a public holiday.

Political tensions added to market unease. President Donald Trump has openly criticized Powell for resisting faster interest rate cuts and has threatened legal action tied to the renovation project. Trump has also indicated that he has already selected a potential successor for Powell, with Kevin Hassett emerging as a leading candidate.

Meanwhile, geopolitical risks continued to build. The United States is reviewing possible responses to Iran as nationwide protests intensify, while European nations including the UK and Germany are discussing expanding NATO’s presence in Greenland to reinforce Arctic security.

In energy markets, Brent crude oil rose on concerns that unrest in Iran could disrupt exports. Precious metals also climbed sharply, with silver leading gains amid rising currency volatility.

Cryptocurrency markets remained positive, with Bitcoin trading near £92,000 and Ethereum advancing above £3,150.

Analysts warn that the investigation into Powell could deepen institutional uncertainty at a time when markets are already sensitive to inflation, geopolitical instability, and slowing global growth. While Powell’s term as Fed chair ends in May, his role as a governor continues until 2028, leaving open questions about the future leadership of the central bank.

For investors, the situation represents a rare moment when politics, monetary policy, and legal risk have converged, potentially reshaping confidence in the Federal Reserve’s independence.