Federal Reserve Chairman Jerome Powell issued an unusual warning in a video statement Sunday that the Fed’s independence is under threat from political intimidation, as evidenced by a grand jury subpoena that the Justice Department served on the bank on Friday under false pretenses.
Federal Reserve Chairman Jerome Powell said in a video posted on the central bank’s website on Sunday that the Fed was served with a grand jury subpoena by the Justice Department on Friday and was threatened with criminal charges over Powell’s testimony before the Senate Banking Committee last summer.
Part of the testimony concerned the Fed’s $2.5 billion project to renovate the Fed’s DC headquarters offices. But Powell said in his speech that this new legal threat to the Fed had nothing to do with the project, calling it a “pretext” and politically motivated for the Justice Department’s actions.
“This new threat is not about my testimony last June or the renovation of the Federal Reserve’s building,” Powell said. “This is not about Congress’s oversight role. The Fed has made every effort to keep Congress informed about renovation projects through testimony and other public information. Those are pretexts. The threat of criminal charges is the result of the Fed setting interest rates based on its best assessment of what will serve the public, rather than following the wishes of the president.”
“This is a question about whether the Fed can continue to set interest rates based on evidence and economic conditions, or rather whether monetary policy is dictated by political pressure and intimidation,” Powell added.
President Trump has closely monitored Powell and the Fed since taking office, repeatedly threatening to fire Powell if the Fed fails to lower interest rates further as Americans grapple with the effects of inflation.
Meanwhile, the average weekly mortgage rate hit a one-year low of 6.15% at the end of December, according to Redfin.
Powell is not the only person at the Fed under the president’s close scrutiny. President Trump also accused Fed Director Lisa Cook of mortgage fraud and said he fired her over the summer. Cook subsequently sued the president over his “unprecedented and illegal” firing, and remains in office even after a federal judge and an appeals court sided with him. The Supreme Court is scheduled to hear the case on January 21st.
Fed Director Adriana Kugler resigned in August, and Fed Director Rafael Bostic announced late last year that he would step down after his term ends in February, a move that sparked speculation that the president was trying to undermine the Fed’s independence by influencing the appointment of local bank presidents.
Mr. Powell concluded his statement Sunday by reaffirming his commitment to integrity in the face of political pressure.
“I’ve served at the Federal Reserve under four administrations, both Republican and Democratic,” Powell said. “In each case, I have carried out my duties without political fear or favor, focusing solely on our mandate to stabilize prices and maximize employment.
“Public service sometimes requires us to remain steadfast in the face of threats. I will continue to do the job that the Senate has authorized me to do with integrity and a determination to serve the American people.”
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