The US justice department is dropping its investigation into the Federal Reserve chairman, Jerome Powell, over alleged building cost overruns.

US Attorney Jeanine Pirro stated that instead, there would be an internal investigation led by the central bank's inspector general.

President Donald Trump has criticized the renovation costs associated with the Fed's building projects, describing them as excessively high, a sentiment reflecting their ongoing public feud.

As Powell's term nears conclusion, the US Senate is considering Kevin Warsh, Trump's nominee for his successor. Republican senator Thom Tillis has indicated he would withhold his support for Warsh unless Trump abandons the investigation into Powell.

American taxpayers deserve answers about the Federal Reserve's fiscal mismanagement, White House spokesman Kush Desai remarked. He emphasized that the inspector general's expanded authorities are essential for thorough inquiries.

The White House expressed confidence in a swift Senate confirmation for Warsh, anticipating a return to competence and confidence in the Fed's decision-making process.

Pirro mentioned on X that she would not hesitate to reinstate a criminal investigation should the facts warrant such action.

The Fed declined to comment on the ongoing developments.

The inspector general’s office confirmed it is actively working on its review and aims to share results with the public and Congress upon completion, although no timeline has been provided.

This decision follows months of public attacks from Trump, who has argued for lower interest rates and has expressed frustration with Powell's decisions as Chairman.

Renovations to the Fed buildings, including removal of asbestos and modernization initiatives first initiated in the 1930s, are expected to significantly reduce future costs. Powell was originally nominated by Trump for the position in 2017.

Last week, Trump reiterated threats to fire Powell if he does not step down by 15 May, the end of his term, even though Powell intends to remain in office until Warsh is confirmed.