NYT: Federal prosecutors open probe into Fed chair Powell amid renovation scrutiny

Recent reports indicate that federal prosecutors have launched an investigation involving Fed Chair Jerome Powell. This news comes amid increasing political pressure regarding the central bank's expensive renovation of its Washington headquarters. The investigation's specific ties to any allegations remain unclear, but if connected to the renovation controversy, it could heighten concerns about the Fed's independence. Furthermore, with Powell's term ending in May 2026, the investigation could also affect the leadership transition timeline. Market participants are wary that this probe may undermine the Fed's policy continuity and clarity, raising political risk premiums, particularly on the dollar. Any confirmed prosecutorial action could complicate the Fed's communications and strategic planning, calling for careful monitoring from investors as the situation develops.