At a Glance
- The Justice Department subpoenaed Fed Chair Jerome Powell on Friday and threatened a criminal indictment
- The threat relates to Powell’s June Senate testimony about renovating Federal Reserve office buildings
- Powell calls the move part of an administration effort to control interest-rate decisions
- Why it matters: The clash tests the Fed’s independence as the White House pressures rate cuts
Federal Reserve Chair Jerome Powell said Sunday that the Justice Department subpoenaed him Friday and threatened a criminal indictment, escalating a yearlong campaign by the Trump administration to influence monetary policy.
Powell said the threatened charges stem from his Senate testimony in June on the renovation of Federal Reserve offices. He called the indictment threat unprecedented and linked it to broader White House pressure on rate decisions.
Indictment Threat Over Renovation Testimony
“No one – certainly not the chair of the Federal Reserve – is above the law,” Powell said. “But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”
He said the subpoenas are the latest tactic to control the Fed and its interest-rate moves:
- Subpoena issued Friday
- Threat of criminal charges tied to renovation testimony
- Powell labels building project a “pretext”
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions-or whether instead monetary policy will be directed by political pressure or intimidation,” Powell said.
He argued the administration is retaliating for the Fed’s refusal to cut rates at the president’s request: “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.”
Powell Vows to Stay in Post
Despite the indictment threat and months of public attacks, Powell said he will not resign. “I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people,” he stated.
President Donald Trump, who appointed Powell during his first term, has repeatedly called for his removal. In a New York Times interview last week, Trump said he had already chosen a replacement for when Powell’s term ends in May.
Renovation Dispute Background
Top White House officials have accused Powell of mismanaging a planned renovation of the Federal Reserve building. Over the summer, they claimed he misled Congress about the scope and cost of the headquarters project.
The Fed responded by bringing in its inspector general to review the expansion. Powell ordered the review after Trump criticized cost overruns, though Powell noted the plans have evolved.
Administration officials seized on the renovation issue last year as part of broader criticism of Powell’s leadership.
Markets React, Others Investigated
In early evening trading, the U.S. dollar fell 0.3% against a basket of other currencies. Equity markets showed little immediate reaction to Powell’s statement.
The Justice Department has also opened an investigation into mortgage-fraud allegations against Fed Governor Lisa Cook. Cook has denied the allegations, according to recent court filings from her legal team.
The White House, Justice Department, and office of U.S. Attorney Jeannine Pirro did not respond to requests for comment.
Key Takeaways
- The DOJ subpoena marks the sharpest legal move yet in the administration’s feud with the Fed
- Powell frames the clash as a fight over central-bank independence on interest rates
- Markets have so far shrugged, but the dispute could intensify ahead of Powell’s May term end
