The US Justice Department has dropped a criminal probe against Federal Reserve Chair Jerome Powell, clearing the way for his replacement's Senate confirmation amid concerns over President Donald Trump's criticism of the independent central bank.
"I have directed my office to close our investigation," US Attorney Jeanine Pirro announced on X.
Pirro said the inspector general for the Fed would instead look into renovation cost overruns at its headquarters, which the Justice Department had been probing.
Trump has routinely criticised the Fed for not following his calls to cut interest rates more rapidly, focusing on Powell in particular.
The probe into Powell, whose term expires May 15, was likely to delay the Senate's confirmation of Trump's pick for a new chairman.
Now, Pirro's announcement is likely to ease that path.
The Trump administration "remains as confident as before that the Senate will swiftly confirm Kevin Warsh as the next Federal Reserve Chairman," White House spokesperson Kush Desai said soon after the Justice Department probe was dropped.
Central bank's independence
Last month, a US federal judge blocked subpoenas issued by the Justice Department against Powell.
"A mountain of evidence suggests that the Government served these subpoenas on the Board to pressure its Chair into voting for lower interest rates or resigning," wrote Judge James E. Boasberg in a filing dated March 11.
"The Court therefore finds that the subpoenas were issued for an improper purpose and will quash them."
Delivering a setback for the criminal investigation into Powell, Judge Boasberg, in the ruling, said the main purpose was to pressure Powell to step aside in favour of a more compliant Fed chair.
At Warsh's confirmation hearing this week before the Senate Banking Committee, Republican Senator Thom Tillis reiterated that he would continue blocking new appointments to the Fed unless the Powell investigation is resolved.
Tillis' vote against the appointment would have been enough to set up an impasse on the panel, which Warsh needs to clear to become the next Fed chief.
