A federal judge in a scathing ruling blocked subpoenas issued by a grand jury to the Federal Reserve as part of a criminal investigation of Chair Jerome Powell, saying there was “a mountain of evidence” they were issued to pressure the Fed’s board into cutting interest rates, as President Donald Trump has long demanded.
U.S. Attorney for the District of Columbia Jeanine Pirro immediately said that the Department of Justice would appeal what she called the “outrageous” ruling, after it was unsealed Friday.
Friday’s action will likely keep Powell in the chairman’s seat longer because Sen. Thom Tillis, R-N.C., has vowed to block Kevin Warsh’s confirmation to succeed Powell until the federal investigation ends.
That may mean interest rates remain higher than Trump wants for longer because Powell has refused to bend to the president’s demands to lower them further.
U.S. District Judge James Boasberg, in his ruling, said evidence showed Pirro was motivated to investigate Powell because of a desire to get the Fed chief to bow to Trump and cut interest rates quickly and broadly.
Pirro’s investigation purportedly is focused on the Fed’s multi-billion-dollar renovation of its headquarters in Washington and on Powell’s testimony to the Senate Banking Committee about that project.
“Did prosecutors issue those subpoenas for a proper purpose? The Court finds that they did not,” Boasberg wrote in the decision in U.S. District Court in Washington, which was dated Wednesday, but unsealed on Friday.
Boasberg wrote, “A mountain of evidence suggests that the Government served these subpoenas on the [Fed’s] Board to pressure its Chair into voting for lower interest rates or resigning.”
“On the other side of the scale, the Government has produced essentially zero evidence to suspect Chair Powell of a crime; indeed, its justifications are so thin and unsubstantiated that the Court can only conclude that they are pretextual,” the judge wrote.
“The Court therefore finds that the subpoenas were issued for an improper purpose and will quash them.”
Pirro blasted Boasberg’s ruling at a news conference Friday, calling it “outrageous.”
“Jerome Powell is now bathed in immunity,” she fumed. “This is wrong, and it is without legal authority.”
Tillis, in a post on X on Friday, predicted the ruling will stand.
“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,” he said.
“We all know how this is going to end and the D.C. U.S. Attorney’s Office should save itself further embarrassment.”
The Federal Reserve declined to comment when contacted by CNBC.
Boasberg’s ruling and the DOJ’s planned appeal are likely to keep Powell in his seat as Fed chair until after his term expires in May.
Tillis’ promised “no” vote on the Banking Committee advancing Warsh’s nomination would deadlock that panel, preventing Warsh from getting a confirmation vote by the full Senate.
Trump’s desire that the Fed slash interest rates further has been further complicated by the Iran war.
Soaring energy costs are likely to dissuade policymakers from easing until there is more clarity about when and how the war will end.
Federal Reserve Chair Jerome Powell speaks during a news conference following a meeting of the Federal Open Market Committee at the Federal Reserve in Washington, Oct. 29, 2025.
Alex Wong | Getty Images News | Getty Images
Recent statements from Fed officials have indicated a mostly cautious approach to further cuts, save from Governors Stephen Miran and Christopher Waller, who have favored lower rates.
Markets already had pushed back any hopes for rate reductions until the end of the year. Before the war, the market had been pricing in at least two cuts.
— CNBC’s Eamon Javers and Jeff Cox contributed to this article
