Three former heads of the US central bank on Monday strongly criticised a criminal investigation into chair Jerome Powell, describing it as a bid to undermine the Federal Reserve’s independence.

In a statement, Janet Yellen, Ben Bernanke and Alan Greenspan, along with 10 other eminent former officials, rallied behind Powell.

“This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly,” the former officials wrote.

“It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success,” they added.

The move by the Department of Justice (DoJ) comes after a year of relentless attacks on Powell by US President Donald Trump.

As well as criticising Powell’s decisions on interest rates, Trump has launched personal attacks, calling the Fed chair a “major loser” and “numbskull”.

The president said he did not “know anything” about the investigation. The Justice Department has been contacted for comment.

The DoJ probe was first disclosed by Powell in an unscheduled video statement on Sunday. He said the Justice Department had threatened a criminal indictment over testimony he gave to a Senate committee last year about renovations to Federal Reserve buildings.

Powell called the investigation “unprecedented” and said he believed it stemmed from Trump’s anger that the Fed had not brought interest rates down more quickly.

“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings,” Powell said. “Those are pretexts.”

The central bank lowered the target for its key lending rate three times in the second half of 2025, putting it in a range of 3.50% to 3.75% – its lowest level in three years. But Trump has repeatedly said that the central bank has not cut interest rates as sharply as he would like.

The DoJ probe “should be seen in the broader context of the administration’s threats and ongoing pressure”, Powell said in his statement.

Monday’s public condemnation of the DoJ move has been signed by former federal government officials appointed by both Democratic and Republican presidents.

When asked by Fox News on Monday about the Fed’s independence, White House spokeswoman Karoline Leavitt deferred to the Justice Department.

“Jerome Powell has proved he’s no good at his job,” Leavitt said. “As to whether he’s a criminal, that’s an answer the Department of Justice is going to have to find.”

Trump has publicly urged Powell to cut interest rates in order to reduce the US government’s hefty borrowing costs and to make it easier for Americans to get mortgages and other loans.

Last year, he spent months attacking Powell on social media and in remarks to reporters. He floated the possibility of firing Powell, only to quickly abandon the idea, which analysts say would rock financial markets and spark a legal battle.

Yellen, who served as Fed chair for a year during Trump’s first term before she was replaced by Powell, said in separate comments that the probe was “extremely chilling”.

“Knowing Powell as well as I do, the odds that he would have lied are zero so I do believe they’re going after him because they want his seat and want him gone,” Yellen told CNBC.

She suggested investors should be concerned about the development.

“You have a president that says the Fed should be cutting rates to lower rate payments on the federal debt… It is the road to banana republic.”

Trump is expected to name someone in the coming weeks to replace Powell, whose term as Fed chairman will end in May.

But the Justice Department investigation and subsequent backlash could disrupt the confirmation process.

North Carolina Senator Thom Tillis, a Republican who is a member of the Senate Banking Committee, said he would oppose the nomination of Powell’s replacement by Trump, and any other Fed Board nominee, until the matter was “fully resolved”.

Initial reaction in US stock markets was muted on Monday. The S&P 500 was roughly flat in early afternoon trading – a notable contrast to last year, when markets were jolted by perceived threats to the Fed’s independence.

Global markets also proved “remarkably resilient” on Monday, said Danni Hewson, head of financial analysis at AJ Bell. She noted that despite the overall calm, financial stocks did slump, as investors weighed the effects of a possible 10% cap on credit card interest rates.

Still, analysts said the market reaction could grow if Trump succeeded in influencing Fed policy.

Some Republican lawmakers also raised concerns about how the Justice Department probe might affect the Fed’s work.

Representative French Hill, the Republican chair of the House Financial Services Committee, said in a statement that the investigation was causing an “unnecessary distraction” and it could “undermine this and future administrations’ ability to make sound monetary policy decisions”.

Senator Kevin Cramer, a Republican member of the Senate Banking Committee, criticised Powell in a statement but added: “I do not believe however, he is a criminal. I hope this criminal investigation can be put to rest.”