Will the seemingly extinguished investigation into the Fed Chair reignite? US prosecutors leave room.

Will the seemingly extinguished investigation into the Fed Chair reignite? US prosecutors leave room.

Washington D.C. Prosecutor suggests 'investigation will resume if problems are found in internal Fed audit.'

Prosecutors have indicated that the investigation into Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), which seemed to have concluded, could be reopened.

Janine Piro, the U.S. Attorney for Washington D.C., stated in an interview with CNN on the 3rd (local time) that the case (prosecutorial investigation) would be closed if no issues were found in the Fed's internal audit regarding the excessive spending on the renovation costs of the Fed building.

U.S. media, including the New York Times (NYT), analyzed Piro's remarks as indicating that prosecutors could reopen the investigation into Powell if issues such as dereliction of duty by Chairman Powell are revealed in the Fed's internal audit.

In connection with the alleged excessive spending on the renovation costs of the Fed building, U.S. prosecutors sent a grand jury subpoena to Chairman Powell last January, leaving open the possibility of criminal charges. Chairman Powell strongly protested this, viewing it as an attack on the Fed's independence.

In this regard, Senator Thom Tillis (R-N.C.), a member of the Senate Banking Committee, insisted he would not agree to the confirmation of Kevin Warsh, the new nominee for Fed Chair, if the investigation was not halted. Consequently, the U.S. Department of Justice informed Chairman Powell and others last month that the investigation into him had been concluded.

Accordingly, with Senator Tillis casting an affirmative vote on the 29th of last month, the confirmation of Warsh as the new Fed Chair nominee passed its first hurdle, the Senate Banking Committee.

In this situation, as Prosecutor Piro has indicated that the investigation into Chairman Powell could be reopened, the developments are drawing attention.

Chairman Powell, whose term as chairman expires on the 15th, stated at his last press conference during his tenure on the 29th of last month regarding the investigation into the alleged excessive spending on the Fed building renovation costs: "I have stated that I will not leave the board until this investigation is transparently, finally, and completely concluded, and I am maintaining that position."

In the past, it was customary for a Fed Chair to step down after their term, even if they had remaining time as a board member. However, Chairman Powell has decided to retain his position as a Fed board member, which expires in January 2028, for the time being.

President Donald Trump, who appointed Powell as Fed Chair in 2018 during his first administration, frequently criticized him with colorful language after regaining power early last year, as Chairman Powell did not meet expectations for significant interest rate cuts.

There is also a strong opinion that the prosecutorial investigation related to the Fed building renovation costs is both pressure on Chairman Powell to cut interest rates and "retaliation" against him for not complying with President Trump's demands for interest rate cuts.