The fight over the Federal Reserve’s independence reached a decisive moment on Thursday when a federal judge didn’t just rule against the Justice Department’s criminal probe of Fed Chair Jerome Powell — he dismantled its premise entirely.
Judge James Boasberg quashed subpoenas that had been issued to the Fed in January, ostensibly seeking information about cost overruns on the renovation of the Fed’s headquarters, ruling that the probe was part of an improper campaign by the Trump administration to pressure the central bank into cutting interest rates more aggressively.
The subpoenas had been characterised by Powell as a pretext, and the judge agreed in language that was unusually direct for a judicial opinion. Boasberg wrote: “The Government has offered no evidence whatsoever that Powell committed any crime other than displeasing the President. 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.”
The ruling has immediate practical consequences beyond the legal victory itself. Senator Thom Tillis, a key Republican vote on the Senate Banking Committee, has vowed to block the confirmation of Kevin Warsh — Trump’s nominee to succeed Powell — until the federal investigation is resolved. With the probe now blocked and the DOJ vowing to appeal, Powell’s position as chair is effectively secured until his term expires in May. And even after May, Warsh’s confirmation path runs through Tillis.
Tillis praised the decision, writing: “This ruling confirms just how weak and frivolous the criminal investigation of Chairman Powell is and it is nothing more than a failed attack on Fed independence. We all know how this is going to end, and the D.C. U.S. Attorney’s Office should save itself further embarrassment and move on.” U.S. Attorney Jeanine Pirro, who oversees the District of Columbia, was combative in response. “He has neutered the grand jury’s ability to investigate crime,” Pirro said at a press conference after the decision was unsealed.
The market implications are significant and compound an already complicated rate picture. Trump has been vocal about wanting cheaper money. The Iran conflict has sent energy costs higher, giving Fed policymakers additional reason to hold rates steady rather than cut. Boasberg’s ruling means the administration’s most aggressive tool for pressuring Powell — the threat of criminal exposure — has been taken off the table for now. Central bank independence, an institutional norm that had never before been tested quite this directly, survived the encounter. The appeal will determine for how long.