At a Glance
- Federal Reserve Chair Jerome Powell says Justice Department subpoenaed him Friday and threatened a criminal indictment.
- The move relates to Powell’s June Senate testimony about renovations at the Fed’s headquarters.
- Powell calls the threat “unprecedented” and says it is part of a yearlong pressure campaign from the Trump administration.
- He vows to stay in office and keep setting interest rates based on data, not political pressure.
Why it matters: The clash raises questions about the central bank’s independence as the White House pushes for lower interest rates.
Federal Reserve Chair Jerome Powell on Sunday accused the Justice Department of threatening him with criminal charges, the latest escalation in a yearlong battle with the Trump administration over interest-rate policy and control of the central bank.
Powell told reporters the subpoena arrived Friday and warned of an indictment tied to his June testimony before the Senate about a planned renovation of Federal Reserve offices. The chair called the legal move part of a broader campaign to bend monetary policy to political will.
Subpoena Targets Testimony on Building Project
The Justice Department’s demand focuses on Powell’s statements regarding the Fed’s headquarters renovation, a project administration officials have criticized for cost overruns. Top White House aides have accused Powell of mismanagement and suggested he misled Congress about the scope and price of the work.
Powell pushed back, saying the renovation issues are a pretext.
“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,” he said.
The Fed has already asked its inspector general to review the building expansion, a step Powell ordered after President Donald Trump attacked the project last summer. Powell noted that the plans have changed over time and said the review is ongoing.
Administration Seeks to Influence Rate Decisions
Powell framed the subpoena as another attempt to pressure the Fed into cutting rates faster. Trump has spent months publicly urging the central bank to lower borrowing costs, arguing the current policy is hurting economic growth.
“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.
The chair stressed that no one is above the law but added that using criminal process against a Fed chair over policy testimony is without modern precedent.
Powell Refuses to Resign
Trump, who appointed Powell during his first term, has repeatedly said he wants the chair gone. In a New York Times interview last week, the president said he has already chosen a replacement for when Powell’s term ends in May.
Powell made clear he will not step down early.
“I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people,” he said.
Separate Inquiry Targets Governor Lisa Cook
The Justice Department has also opened an investigation into mortgage fraud allegations against Fed Governor Lisa Cook, according to court filings released this week. Cook denies any wrongdoing, her legal team said.
The White House, the Justice Department, and the office of U.S. Attorney Jeannine Pirro all declined to comment on the subpoena or the investigation into Cook.
Markets Shrug Off Latest Twist
Currency traders reacted mildly to Powell’s statement. The U.S. dollar slipped 0.3% against a basket of other currencies in early evening trading, a modest move that suggests investors see limited immediate fallout for monetary policy.
Key Takeaways
- The Trump administration is using legal tools to pressure Fed leadership over interest-rate policy.
- Powell views the criminal threat as retaliation for keeping rates steady despite White House demands.
- The chair’s vow to stay in office sets up a potential showdown if the president tries to remove him before his term expires.
- A separate probe into Governor Cook adds to the legal cloud hanging over the central bank.
