Fed Chair Powell Faces Criminal Referral Over $600 Million Renovation Claim

- Representative Anna Paulina Luna accuses Fed Chair Jerome Powell of perjury. - Legal challenges intensify market speculation around a potential September rate cut. Representative Anna Paulina Luna, a Republican congresswoman from Florida, has referred Federal Reserve Chair Jerome Powell for a criminal investigation, alleging he committed perjury with his statements about the $600 million renovation of the Federal Reserve’s Eccles Building. The referral, dated July 19, 2025, accuses Powell of providing false information during his testimony before the Senate Banking Committee on June 25, 2025. In July 2025, media outlets reported that Luna’s referral alleges Powell made "materially false claims" regarding the scope of renovations, suggesting he downplayed the project's inclusion of luxury elements. According to Luna's letter to U.S. Attorney General Merrick Garland, Powell knowingly misled Congress about the nature and cost of the taxpayer-funded initiative. As a result, if convicted of perjury, Powell could face up to five years in prison and financial penalties. The Department of Justice has not commented publicly on the referral, and authorities have filed no formal charges against Powell. In response to the allegations, Powell denied any wrongdoing and ordered a formal watchdog investigation into the building's renovation costs. In addition, to address public scrutiny, the Federal Reserve published a video tour and detailed plans of the renovation on its official website. This legal development adds to growing political pressure on Powell amid broader debates on monetary policy. Former President Donald Trump, a frequent critic of Powell’s leadership, has advocated for sharp interest rate reductions, although he stated it is "highly unlikely" he would pursue Powell’s dismissal. Meanwhile, Luna’s referral adds complexity to the Federal Reserve Chair’s position during a time of intensified scrutiny. This controversy coincides with increased investor anticipation for an interest rate cut in September. According to market data from mid-August 2025, tools such as CME’s FedWatch report a 92% probability of a 25-basis-point rate reduction. Analysts observed a near 100% likelihood as of August 14, a figure that stands in stark contrast to the 56.1% probability reported at the end of July. Treasury Secretary Scott Bessent also acknowledged that the market is pricing in a significant likelihood of policy easing, citing cooling inflation and mounting tensions surrounding Powell’s leadership as reasons for this trend.