Former President Donald Trump has indicated he is open to investigating current Federal Reserve Chair Jerome Powell through means other than the Justice Department. This move could potentially offer a way out of the current political impasse surrounding the leadership transition at the Fed, though market concerns about the central bank's independence persist.

According to a report by news outlet Semafor, Trump responded to media questions on Thursday by stating that it would be "possible, and simple" to have an entity other than the Justice Department investigate Powell and matters related to the costs of Fed renovation projects. This statement signals that Trump has not abandoned his intent to hold Powell accountable but has left room for maneuver regarding which body conducts the investigation.

These developments are directly tied to the confirmation process for Kevin Warsh, Trump's nominee for Fed Chair. Senator Thom Tillis of North Carolina has previously vowed to block Warsh's nomination until issues concerning the investigation into Powell are resolved. As a key vote on the Senate Banking Committee, Tillis's stance is crucial for Warsh's potential confirmation. It remains unclear whether Trump's latest comments will break the deadlock.

A congressional investigation is emerging as a potential compromise. Tillis indicated earlier this month that he would welcome a congressional probe if it could lead the Justice Department to drop its investigation into Powell. This opens a potential avenue for compromise—shifting the investigative authority from the executive branch's Justice Department to the legislative branch might partially address Tillis's concerns while allowing Trump political room to continue pressuring Powell.

However, it is uncertain whether this alternative approach would be sufficient for Tillis to change his position and clear the path for a confirmation vote on Warsh.

The controversy over renovation costs has become a focal point of the investigation. During the interview, Trump again referenced the Fed's building renovation project, describing the associated costs as high and implying potential issues. "You have to figure out what went wrong," he said, "It was a beautiful building, they tore it apart, probably because the fix-up cost was too high."

This dispute stems from questions about the cost of the renovations to the Fed's headquarters and Powell's related testimony to Congress. The Trump administration had previously initiated a Justice Department investigation into the matter, linking it to the political maneuvering aimed at blocking Warsh's confirmation.

The question of Powell's tenure remains unresolved, with Trump threatening dismissal. Powell's current term as Fed Chair is set to expire in mid-May. He has stated that he will remain on the Fed's Board of Governors after his term ends if the Justice Department investigation is still ongoing; if Warsh is not confirmed by then, Powell would also continue to serve as acting Chair.

In response, Trump has suggested that he might fire Powell if he does not leave the Fed in a "timely" manner. Trump's series of actions targeting the sitting Fed Chair have raised alarm in Congress, with several lawmakers expressing concern that the central bank's independence is under threat. Analysts note that any substantive erosion of the Fed's independence could have profound effects on the U.S. economy and potentially trigger significant volatility in financial markets.