The decision was communicated in a post on X by prosecutor Jeanine Pirro in Washington, D.C.
The Trump administration has a long-standing conflict with the US Federal Reserve, especially with Powell. In November, federal prosecutors opened an investigation into the central bank chief, drawing harsh criticism from several quarters.
The investigation was linked to a $2.5 billion renovation of the central bank's offices.
Powell himself has stated that the main reason for the investigation is something else, namely that he did not want to do what Trump wants - lower interest rates.
The closure decision could mean that Kevin Warsh, whom President Trump has nominated to succeed Powell when his term expires in May, will receive the green light from the Senate.
Republican Senator Tom Tillis has announced that he will vote no on Warsh until the investigation into Powell is resolved, effectively blocking the nomination.
