Powell accuses Trump of using threat of criminal charges to intimidate Fed

Justice Department issues subpoenas over Powell's building renovation testimony

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Federal Reserve Chair Jerome Powell said on Sunday the Department of Justice has served the central bank with subpoenas and threatened it with a criminal indictment over his testimony this summer about the Fed’s building renovations.

The move represents an unprecedented escalation in President Donald Trump’s battle with the Fed, an independent agency he has repeatedly attacked for not cutting its key interest rate as sharply as he prefers. The renewed fight will likely rattle financial markets and could over time escalate borrowing costs for mortgages and other loans.

$2.5b renovation in focus

The subpoenas relate to Powell’s testimony before the Senate Banking Committee in June, the Fed chair said, regarding the Fed’s $2.5 billion renovation of two office buildings, a project that Trump has criticised as excessive.

Powell on Sunday cast off what has up to this point been a restrained approach to Trump’s criticisms and personal insults, which he has mostly ignored.

The gloves are off

Instead, Powell issued a video statement in which he bluntly characterised the threat of criminal charges as simple “pretexts” to undermine the Fed’s independence when it comes to setting interest rates.