US DOJ Abruptly Ends Jerome Powell Criminal Investigation, Opening the Era of Kevin Warsh as Next Fed Chair

On Friday, April 24, 2026, the final hurdle blocking a new era of U.S. monetary policy was removed. The U.S. Department of Justice (DOJ) abruptly halted its criminal investigation into Federal Reserve Chair Jerome Powell, which is interpreted as a de facto 'green light' for the confirmation of Kevin Warsh, President Donald Trump's nominee for the next chair.

This decision is a measure to protect the independence of the Federal Reserve and ensure a smooth transition to the next leadership.

The DOJ's action signals its intent not to treat the investigation into Powell's alleged perjury regarding renovation costs for the Fed headquarters as a criminal case, instead handing it over to the Inspector General (IG). Jeanine Pirro, the U.S. Attorney for D.C. and an ally of President Trump, announced on social media that the Fed's Inspector General now has the authority to review the matter.

Resolving the Senate Confirmation Deadlock

Previously, Republican senators, including Tom Tillis (R-NC) of the Senate Banking Committee, had refused to proceed with Warsh's confirmation process, claiming the investigation into Powell was politically motivated. With the DOJ closing the probe, this political standoff has been resolved, and a Senate confirmation vote for Warsh is expected to proceed swiftly.

• Kevin Warsh is a former Federal Reserve Governor and a former Senior Fellow at Stanford University's Hoover Institution.
• He is scheduled to lead the Fed following Chair Powell, whose term expires in May 2026.
• Warsh advocates for a 'Regime Change' and the introduction of new rules to combat inflation.

Financial markets are reacting immediately to the news of this leadership change. Investors anticipate that the Fed will maintain a more hawkish stance under Warsh, with market pricing reflecting expectations of no interest rate cuts for at least the next 16 months. Notably, the 2-year Treasury yield is trading near 4%, as markets have already begun adjusting to the new regime.

Nominee Warsh has sent a 'Big Bull Signal' to investors while signaling fundamental policy changes to tackle the current inflationary environment. He is garnering market expectations by advocating for the application of clearer inflation rules rather than the existing data-dependent approach. The table below summarizes the key policy differences between the outgoing Chair Powell and nominee Warsh.

Powell has strongly pushed back against the investigation, criticizing it as a political attempt to exert influence over interest rate policy. While the threat of criminal prosecution has vanished, the Fed's internal Inspector General still retains the authority to continue investigating the expenditure process for the headquarters renovation, meaning the evaluation of Powell's legacy will continue.

The Significance of the Upcoming Leadership Transition

The change of Fed Chair scheduled for May 2026 is regarded as one of the most significant turning points in modern U.S. monetary and financial history. Republican leadership, including Senate Majority Leader John Thune, plans to finalize the schedule for nominee Warsh's confirmation hearing and vote within the next week.

Market analysts are focusing on the impact Warsh's arrival will have on the bond yield curve. With the 2-year Treasury yield currently trading near 4%, a key point of interest is how the 'new normal' presented by the new Fed Chair will reshape liquidity flows in global financial markets.

In conclusion, the DOJ's decision has laid the groundwork for nominee Warsh to unfold his monetary policy vision by removing political uncertainty. As the era of Chair Powell draws to a close and Warsh's 'Regime Change' nears, the global financial community is closely monitoring the winds of change blowing from Washington.