Federal prosecutors in Washington have reportedly opened a criminal investigation into Federal Reserve Chair Jerome Powell over the central bank's multibillion-dollar renovation of its headquarters and whether Powell misled Congress about the project.

The inquiry, approved in November by U.S. Attorney Jeanine Pirro, is examining Powell's public testimony and Federal Reserve spending records related to the renovation, which is now estimated to be roughly $700 million over budget, with total costs nearing $2.5 billion, The New York Times reported Sunday night.

The investigation marks a significant escalation in President Donald Trump's long-running clash with Powell, whom the president has repeatedly criticized for resisting calls to sharply cut interest rates.

Trump has threatened to fire Powell and said he has already chosen a replacement, with Kevin Hassett, his top economic adviser, seen as a leading contender. Powell's term as chair ends in May, though his term as a Fed governor runs through January 2028.

Prosecutors have requested documents from Powell's staff but have not publicly confirmed whether a grand jury has been convened or whether subpoenas have been issued. The Justice Department and the Federal Reserve declined to comment to the Times.

At issue are renovations that began in 2022 on the Fed's historic Washington buildings, including asbestos removal, accessibility upgrades, and modernization.

Powell has denied allegations that the project includes luxury features such as private dining rooms, special elevators, or new marble, saying earlier plans were revised and scaled back.

The Fed has attributed cost overruns to higher labor and material costs and unforeseen contamination.

Powell issued a statement Sunday night, respecting the investigation but vowing to "stand firm in the face of threats."