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Federal Reserve Chair Jerome Powell said Sunday that the Justice Department subpoenaed the central bank late last week and threatened a criminal indictment, escalating what he described as a sustained pressure campaign by the Trump administration to influence monetary policy.
Powell said the subpoena, issued Friday, relates to his June testimony before the Senate concerning the renovation of Federal Reserve office buildings — a project that administration officials have seized on amid President Donald Trump’s repeated demands for lower interest rates.
“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.”
Powell characterized the subpoena as the latest attempt to exert political control over the Fed, which operates independently from the White House and is tasked with setting interest rates based on economic conditions.
Fed independence at stake
“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.
https://x.com/federalreserve/status/2010510130970849338?s=20
The Fed cut interest rates three times last year, but Trump has continued to argue that rates remain too high as affordability pressures hit consumers. Since before the start of his second term, Trump has repeatedly criticized Powell and other Fed officials, accusing them of failing to act aggressively enough.
Powell said the administration’s focus on the Fed’s headquarters renovation was 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.
Powell added that the threat would not cause him to step down, despite Trump’s repeated calls for his removal.
“I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people,” Powell said.
Trump denies pressure campaign
In a phone call with NBC News, Trump said he was unaware of the Justice Department probe and again criticized Powell.
“I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings,” Trump said.
Asked whether the subpoena was intended to pressure the Fed to lower interest rates, Trump denied it.
“No. I wouldn’t even think of doing it that way,” Trump said. “What should pressure him is the fact that rates are far too high.”
Renovation scrutiny and DOJ response
Top White House officials have accused Powell of mismanaging a previously planned renovation of the Federal Reserve’s headquarters, alleging last summer that he may have misled Congress about the scope and cost of the project.
The Fed said it asked its inspector general to review the renovation following those criticisms. Powell has said the plans evolved over time and that cost overruns were disclosed.
A Justice Department spokesperson declined to comment on the specifics of the subpoena.
“The attorney general has instructed her U.S. attorneys to prioritize investigating any abuse of taxpayer dollars,” the spokesperson said.
The Federal Reserve is not funded by congressional appropriations. Instead, it finances its operations through fees for financial services, interest on loans to banks and income from its portfolio of U.S. government securities.
Political reaction and market impact
Sen. Thom Tillis, R-N.C., said in a statement that the subpoena underscores growing concerns about political interference.
“If there were any remaining doubt whether advisers within the Trump administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” Tillis said.
Tillis added that he will oppose confirmation of any Trump nominee to the Federal Reserve until the legal matter is resolved.
Financial markets showed limited immediate reaction. The U.S. dollar fell about 0.2% against a basket of currencies, while S&P 500 futures declined 0.5% and Nasdaq 100 futures slipped 0.8%. Gold and silver rose to record highs, reflecting investor unease.
Broader pressure on the Fed
Trump, who appointed Powell during his first term, has spent months attacking the Fed chair publicly and said last week in an interview with The New York Times that he has already chosen a replacement when Powell’s term expires in May.
The Justice Department has also investigated mortgage fraud allegations against Federal Reserve Gov. Lisa Cook, who holds a permanent vote on interest rate decisions. Cook has denied the allegations, and her attorneys say she “did not ever commit mortgage fraud.”
