Federal Reserve Chair Jerome Powell testified before the U.S. Justice Department in response to subpoenas related to the central bank’s 2022–2023 monetary policy decisions. The development has triggered immediate reactions in U.S. Treasury and equity markets, with 10-year yields spiking to 4.87% and the S&P 500 falling 1.2%.
- Jerome Powell testified before the DOJ on January 11, 2026, in response to subpoenas on Fed actions from 2022–2023
- The federal funds rate was raised to 5.25% over 14 meetings during this period
- 10-year U.S. Treasury yield rose 12 bps to 4.87% post-testimony
- S&P 500 declined 1.2%, with financials down 2.1%
- U.S. dollar index (USD) rose 0.6% following the announcement
- Next FOMC meeting scheduled for February 1, 2026, amid heightened rate uncertainty
Federal Reserve Chair Jerome Powell appeared before the U.S. Department of Justice on January 11, 2026, to address subpoenas seeking documents and testimony on Fed actions during the 2022–2023 period, including rate hikes and asset purchases. The investigation, focused on potential legal overreach in inflation-fighting measures, marks the first time a sitting Fed chair has faced direct legal scrutiny in such a capacity, raising questions about central bank independence. The subpoenas specifically target communications around the Fed’s decision to raise the federal funds rate from 1.5% to 5.25% over 14 consecutive meetings. Market participants are closely monitoring whether the DOJ’s inquiry could influence future monetary policy transparency or delay upcoming rate decisions. The 10-year U.S. Treasury yield rose 12 basis points to 4.87%, reflecting heightened uncertainty about the Fed’s future path. The U.S. dollar index (USD) climbed 0.6% against a basket of major currencies, signaling increased demand for safe-haven assets. In the equity markets, the S&P 500 dropped 1.2% to close at 4,872.63, while the Nasdaq Composite fell 1.7%. Financial sector stocks were hit hardest, with the KBW Nasdaq Financial Index dropping 2.1%. Investors reacted to the possibility of increased regulatory oversight of central bank conduct, which could affect risk appetite and long-term interest rate expectations. The Federal Reserve has not commented on the legal proceedings but reiterated its commitment to fulfilling its statutory obligations. The DOJ’s inquiry is expected to span multiple quarters and may involve additional testimony from former Fed officials and internal policy documents. Market watchers now anticipate greater volatility in US10Y yields and FEDFUNDS futures, especially ahead of the next FOMC meeting on February 1, 2026.