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U.S. Federal Reserve Chair Jerome Powell said on Sunday the Trump administration had threatened him with a criminal indictment and served grand jury subpoenas over Congressional testimony he gave last summer regarding a Fed building renovation project, an action Powell called a “pretext” aimed at putting further pressure on the central bank to lower interest rates.
“On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June,” Powell said in a statement on Sunday in what amounts to a dramatic escalation in the fight between him and Donald Trump that dates to Powell’s first years as chair in 2018.
“I have deep respect for the rule of law and for accountability in our democracy. No one—certainly not the chair of the Federal Reserve—is above the law,” Powell said in the brief statement released by the Fed late on Sunday.
“But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure,” for lower interest rates, he said.
The White House declined to comment, referring questions to the Department of Justice.
Trump has demanded the Fed cut rates sharply since resuming office in January, blaming its policy for holding back the economy and musing about firing Powell despite the legal protections ostensibly covering the Fed chair from removal because of a policy dispute.
“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress’s oversight role,” Powell said.
“Those are pretexts. 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.
Battle ramps up between Trump and Fed
The subpoenas and statement by Powell mark a stark escalation in Trump’s battle to influence the Fed and in his relationship with Powell, who has largely eschewed comment on the President’s actions or statements, instead acknowledging that chief executives often express opinions about a variety of issues.
However, the Trump administrations latest moves, coming within months of the end of Powell’s term as chair in May, appear to have marked a turning point, with Powell directly accusing the administration of using the legal system to try to achieve its goal of getting the Fed to lower interest rates further and faster than the central bank’s body of 19 policymakers feels is appropriate.
The White House began early last year criticizing the Fed’s $2.5 billion renovation of two of its buildings in Washington, describing it as overly costly and ostentatious.
Some analysts at the time did call it a pretext for the Trump administration’s pressure campaign for lower interest rates, but Powell did not, instead posting detailed explanations of the work on the Fed’s website and sending letters to members of the Trump administration providing background.
In June, when Powell gave his usual twice-yearly testimony on monetary policy to Congress, he was asked repeatedly about the work, which he explained as being necessary updates to outdated infrastructure. In July, Trump made a rare presidential visit to the site, and Powell gave him a tour.