WASHINGTON — Federal Reserve Chair Jerome Powell said Sunday that the Justice Department has subpoenaed the central bank and threatened a criminal indictment tied to his congressional testimony about the Fed’s headquarters renovations, according to the Associated Press.
The move marks a sharp escalation in President Donald Trump’s long-running clash with the independent central bank, which he has repeatedly criticized for not cutting interest rates more aggressively. The development could unsettle financial markets and, over time, affect borrowing costs for consumers and businesses.
Powell said the subpoenas stem from his June testimony before the Senate Banking Committee regarding the Fed’s $2.5 billion renovation of two Washington office buildings, a project Trump has publicly attacked as excessive, the Associated Press reported.
Breaking from his typically restrained response to Trump’s criticism, Powell released a video statement accusing the administration of using criminal threats to pressure the Fed.
“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 said, according to the AP report. “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.”