Powell accuses Justice Department of indictment threat over testimony

Federal Reserve Chair Jerome H. Powell said the Department of Justice served the Fed with grand jury subpoenas and threatened him with a criminal indictment over testimony he gave to the Senate last summer about the central bank’s office-building renovation. Powell disclosed the action in a statement and a video released over the weekend, framing the move as an effort to pressure the central bank amid a broader dispute with the White House over interest-rate policy.

“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. He added that he has “deep respect for the rule of law and for accountability in our democracy,” and he portrayed the confrontation as a test of whether monetary policy will be set on the basis of evidence and economic conditions rather than political pressure.

The subpoenas are reported to concern Powell’s June testimony about a roughly $2.5 billion renovation of two Fed office buildings that drew public criticism from President Donald Trump last summer as excessive. Powell characterized the DOJ action as a “pretext” intended to increase pressure on him and the Fed as the central bank resists calls from the administration to lower its policy rate more aggressively.

The Justice Department said it could not comment on any particular case but added that Attorney General Pam Bondi “has instructed her US Attorneys to prioritize investigating any abuse of taxpayer dollars.” No criminal charges have been filed as of publication, and the scope and targets of the grand jury subpoenas remain undisclosed.

The episode marks an unprecedented escalation in a long-running clash over central bank independence. Administration officials have repeatedly criticized the Fed for failing to cut interest rates as quickly as the president has urged, and Powell’s account signals that those tensions have migrated from public rhetoric to potential legal pressure.

Markets are likely to respond. Legal threats to a sitting Fed chair could unsettle investors already sensitive to political interference in policy decisions; analysts warned such a development could affect market confidence and, over time, borrowing costs for mortgages and business loans if it undermines perceptions of the Fed’s objectivity. The immediate reaction will be watched closely in trading on Monday.

The Fed has historically sought to preserve its independence while avoiding public confrontation with the White House. In recent months it has shown restraint in some areas that drew political scrutiny, including scaling back certain policy efforts such as work to evaluate climate-related risks to the banking system. Powell’s disclosure suggests that restraint has not ended the broader conflict.

Officials in the White House did not immediately respond to requests for comment. Congressional committees with jurisdiction over the Fed and the Justice Department are positioned to demand documents and testimony in the coming days, and legal advisers are likely to scrutinize both the subpoenas and any grand jury activity for signs of partisan overreach.

At stake is the principle that monetary policy be guided by economic data and risk assessments rather than political pressure. Whether the Justice Department will proceed to an indictment, and how courts and Congress will respond, remains uncertain and could shape the relationship between the central bank and the executive branch for years.