Breaking! Federal Reserve, a major change!

Breaking news: Major developments in the Federal Reserve Chairperson transition.

According to newly released documents, Fed Chair Jerome Powell’s private lawyer sent a firm message to the Trump administration: if the criminal investigation into his overspending case continues, he will remain on the Federal Reserve Board until 2028 after his term ends this May.

For financial markets, there is no precedent for a former Fed Chair serving alongside the current Chair. Wall Street analysts note that, given the Department of Justice’s appeal and government statements in declassified documents, Powell’s chances of staying on after May 15 have increased.

Additionally, the confirmation process for Kevin Warsh, the Fed Chair nominee nominated by President Trump, may also face obstacles. Key Republican senator Thom Tillis warned he intends to block the nomination until Powell’s investigation is resolved.

Notably, this week marks the “Super Central Bank Week,” with the Fed, European Central Bank, Bank of England, and Bank of Japan all scheduled to announce interest rate decisions. Markets expect the Fed to hold rates steady, but the updated dot plot may show only one rate cut in 2026, possibly below previous market expectations.

Powell Issues “Threats”

Declassified court documents reveal that Powell’s private lawyer conveyed four key points to federal prosecutor Jeanine Pirro: Trump lacks enough Senate votes to confirm a new Chair; Powell believes maintaining Fed independence requires him to stay in office; he will not relinquish his seat if investigations are ongoing; but if investigations are dropped, the outcome could differ.

The Department of Justice characterized this exchange as “pressure” on the prosecutor.

The investigation stems from a June last year hearing before the Senate Banking Committee, where Powell discussed the $2.5 billion Washington headquarters renovation budget overruns. By the end of 2025, U.S. prosecutors launched a grand jury investigation to determine whether the overspending constituted fraud and whether Powell made false statements to Congress.

On January 9, this year, the DOJ served a subpoena to the Fed, threatening criminal charges against Powell for testifying before the Senate Banking Committee in June 2025 about the renovation project.

Powell previously responded publicly, stating that the threat of criminal charges was because the Fed sets interest rates based on public interest, not presidential preferences.

U.S. Judge Dismisses Subpoena Against Powell

According to CCTV News, on March 13, a federal judge in Washington, D.C., announced he would dismiss the DOJ’s subpoena to Powell, citing “almost no evidence.”

Chief Judge James Boasberg of the U.S. District Court wrote in a court document: “Extensive evidence indicates that the government issued these subpoenas to pressure the Fed Chair (Powell) to support rate cuts or to force his resignation.”

Boasberg stated that the court found these subpoenas were issued for improper purposes and “decided to revoke them.”

In response, Prosecutor Jeanine Pirro announced plans to appeal.

The appeal process will further delay the confirmation of Kevin Warsh, Trump’s Fed Chair nominee.

Senate Banking Committee Republican Thom Tillis reiterated on Friday that the DOJ’s appeal would only prolong Warsh’s confirmation process, vowing to block the nomination until Powell’s investigation concludes.

Pirro called the ruling “lawless” at a Friday press conference and said the DOJ would appeal. She accused Powell of currently being protected by immunity, preventing the office from investigating the Fed.

When asked whether the appeal would further hinder Trump’s Fed Chair nomination, Pirro dismissed the concern, saying she only cares about the legal aspect, “the rest is just noise.”

Media reports indicate that White House spokesperson Kush Desai stated Warsh’s academic background, private sector experience, and previous tenure at the Fed make him fully qualified to be the next Fed Chair.

He emphasized that the White House is working closely with Congress to expedite the confirmation and restore public confidence in the Fed.

Since January 2025, relations between Trump and Powell have grown increasingly strained. Trump has repeatedly criticized Powell for not cutting rates aggressively and has pressured him in various ways, repeatedly calling for his resignation.