Powell says Justice Department served Fed with subpoenas

[WASHINGTON] US Federal Reserve chair Jerome Powell said that the US central bank had been served grand jury subpoenas from the Justice Department threatening a criminal indictment related to his June congressional testimony on ongoing renovations of the Fed’s headquarters.

In a statement released on Sunday (Jan 11) evening, Powell rejected the notion that the action was driven by his testimony or the renovation.

“Those are pretexts,” Powell said. “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.”

Powell added: “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.”

The US dollar weakened on the news, falling against all its major counterparts, while gold extended gains to a record high. Futures on the S&P 500 Index fell 0.3 per cent.

The unprecedented move by the Trump administration marks an escalation of Trump’s longstanding feud with the Fed chair. The president has long called for aggressive rate cuts. He has also sought to fire another Fed governor, a move that is currently tied up in the courts.

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Powell said the potential indictment “should be seen in the broader context of the administration’s threats and ongoing pressure”.

He said that he intends to continue doing his job “with integrity and a commitment to serving the American people”. BLOOMBERG