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

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

Powell's term is nearing its end and the US Senate is considering Trump's nominee for his replacement, Kevin Warsh. A key Republican, Thom Tillis, has withheld his support for Warsh unless the Trump administration would drop its investigation into Powell.