Jerome Powell Subpoenaed, Cites Government Threats
Powell’s term as Fed chair expires in May, and Trump has suggested he has already decided whom he will back as a replacement.
Quick overview
- Federal Reserve Chair Jerome Powell claims that the judicial investigation against him is a response to pressure from the White House to lower interest rates.
- Powell alleges that the Trump administration threatened him with criminal charges related to his congressional testimony about a renovation project at the Fed's headquarters.
- The ongoing conflict over U.S. monetary policy has caused Wall Street futures to drop by as much as 1%.
- Powell's term as Fed chair expires in May, with speculation about potential replacements favored by Trump.
The head of the Federal Reserve released a video claiming that the judicial investigation is in fact a response to pressure from the White House to cut interest rates.
The White House is once again taking aim at the Fed. Federal Reserve Chair Jerome Powell said on Sunday that Donald Trump’s administration threatened him with criminal charges and issued federal grand jury subpoenas related to testimony he gave to Congress last summer regarding a renovation project at the Fed’s headquarters. Powell argued that these actions are part of Trump’s broader effort to pressure the central bank into lowering interest rates.
The renewed clash over control of U.S. monetary policy has once again put markets on alert. Futures on major Wall Street indexes fell by as much as 1%.
On Sunday night, Powell himself issued an unusually forceful statement, releasing a video through the Federal Reserve’s official social media channels. According to the central bank chief, the legal action is a “pretext” designed to intensify pressure on the institution to cut rates.
“I have a 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. However, he quickly added: “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what serves the public, rather than following the preferences of the president.”
Trump’s Escalating Pressure on the Fed
The federal subpoenas and threats to put Powell on trial over his testimony regarding the Fed’s building renovations represent an unprecedented escalation in Trump’s dispute with the central bank’s leadership.
The current Republican administration has repeatedly attacked the Fed for failing to deliver the aggressive interest-rate cuts it has demanded. The renewed tension is expected to weigh on financial markets when they open on Monday.
Formally, the subpoenas are tied to Powell’s testimony before the Senate Banking Committee last June, in which he addressed the $2.5 billion renovation of two Federal Reserve office buildings—a project Trump criticized as excessive.
Powell’s term as Fed chair expires in May, and Trump has suggested he has already decided whom he will back as a replacement. White House economic adviser Kevin Hassett and former Fed governor Kevin Warsh are widely seen as the leading contenders.
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