Three former heads of the US central bank have decried federal prosecutors’ criminal investigation into chair Jerome Powell as an “unprecedented” bid to undermine the Federal Reserve’s independence.

In a statement on Monday, 10 economic policy leaders – including former Treasury Department secretaries – joined former Fed chairs Janet Yellen, Ben Bernanke and Alan Greenspan to rally behind Powell.

“The Federal Reserve’s independence and the public’s perception of that independence are critical for economic performance,” they wrote.

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

“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 economic policy leaders said.

The signatories included former federal government officials appointed by both Democratic and Republican presidents.

The statement of condemnation was published one day after Powell disclosed that the US Department of Justice (DoJ) had served the agency with subpoenas and threatened a criminal indictment over testimony he gave to a Senate committee about renovations to Federal Reserve buildings.

Powell, whose unscheduled video statement came as a highly unusual move, also called the investigation “unprecedented”. He said he believed it stemmed from US President Donald Trump’s anger that the Fed had not brought interest rates down more quickly.

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.

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 disavow the idea, which analysts say would rock financial markets and spark a legal battle.

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

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 this legal matter is 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.

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

“If the market’s directional reaction isn’t forceful enough (so far), it is likely because traders this morning see a limitation to the White House’s success in getting its way,” said Thierry Wizman, global FX and rates strategist at Macquarie Group.