DOJ ends probe of Fed Chair Powell; markets push back expected rate cuts

The Justice Department dropped its criminal probe of Federal Reserve Chair Jerome Powell on Friday, ending a pressure campaign that had clouded the central bank’s leadership and policy outlook. (finance.yahoo.com) (yahoo.com) The investigation had focused on whether Powell lied to Congress about the cost of the Federal Reserve’s $2.5 billion renovation of its Washington headquarters. U.S. Attorney Jeanine Pirro said April 24 that she had instead asked the Fed’s inspector general to keep examining the overruns. (finance.yahoo.com) The move also removed a Senate roadblock for Kevin Warsh, President Donald Trump’s nominee to succeed Powell. Yahoo Finance reported that Senator Thom Tillis had told Warsh this week that he would not support the nomination while the Justice Department probe remained open. (finance.yahoo.com) Markets treated the end of the probe as a sign that immediate political pressure on the Fed may ease, but they did not price in faster rate cuts. Instead, traders marked down the odds of near-term easing and extended the expected wait for the next cut. (finance.yahoo.com) (cryptobriefing.com) CryptoBriefing said a prediction market put the odds of a 25-basis-point cut in June 2026 at 4.5% on April 24, down from 5% a day earlier. The same write-up said traders were pricing no rate changes before September 2027. (cryptobriefing.com) In bonds, Mortgage News Daily showed the 2-year Treasury yield at 3.783%, down 5.5 basis points on the day, while the 10-year yield fell 2.2 basis points to 4.303% by 5:59 p.m. Eastern. Its market commentary said Friday’s session was “friendlier” for bonds after another volatile day. (mortgagenewsdaily.com) Mortgage News Daily also said its 30-year fixed mortgage rate index was unchanged at 6.32% on April 24, staying in a 0.03 percentage-point range for the week. That left mortgage rates near their lowest levels in more than a month even as traders pushed out Fed cut bets. (mortgagenewsdaily.com) The backdrop is a fight over whether the White House can use criminal pressure to influence monetary policy. Yahoo Finance reported that Powell and other Fed officials had described the investigation as a pretext to force the benchmark federal funds rate toward 1% or lower. (finance.yahoo.com) A federal judge had already blocked two subpoenas from Pirro’s office to the Fed’s Board of Governors last month, according to Yahoo Finance’s account of the case. The Fed’s inspector general separately said it has been reviewing the renovation project since July 2025. (finance.yahoo.com) For now, the probe is over, Powell remains in place through the end of his chair term on May 15, and markets are trading as if the next big fight is not a June cut but who controls the Fed after Powell. (finance.yahoo.com)