Washington (United States) (AFP) – Federal Reserve Chairman Jerome Powell said Sunday that the central bank had been subpoenaed by the US Justice Department, blasting the move as part of President Donald Trump’s extraordinary pressure campaign on US monetary policy decisions.
Powell added in a statement that the bank received grand jury subpoenas “threatening a criminal indictment” on Friday related to his Senate testimony in June, which had been about a major renovation project of Federal Reserve office buildings. He dismissed the possible threat of indictment over his testimony or the renovation project as “pretexts.”
“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 said. “This unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure,” Powell said.
The Fed has a dual mandate to keep prices stable and unemployment low, and its main tool in doing so is by setting a key interest rate that influences the cost of borrowing across the economy. Trump has consistently pressured Powell and the central bank to move faster in lowering interest rates, in a breach of the long-standing independence of the institution.
Trump on Sunday denied any knowledge of the Justice Department’s investigation into the Federal Reserve. “I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings,” NBC quoted Trump as saying.
Senators from both sides of the aisle blasted the investigation. “It is now the independence and credibility of the Department of Justice that are in question,” Republican Thom Tillis said. “I will oppose the confirmation of any nominee for the Fed — including the upcoming Fed Chair vacancy — until this legal matter is fully resolved,” he added.
Democrat Elizabeth Warren accused Trump of trying “to complete his corrupt takeover” of the central bank by pushing Powell out and installing a “sock puppet” instead. Powell’s term as chairman of the Federal Reserve ends in May, and Trump told Politico in an interview last month that he would judge Powell’s successor on whether they immediately cut rates.
The US president has openly spoken about ousting Powell but stopped short of doing so, and focused instead on cost overruns for renovation of the Fed’s Washington headquarters. In July, the cost of the Fed’s facelift of its 88-year-old Washington headquarters and a neighboring building were up by $600 million from an initial $1.9 billion estimate. That month, Trump made an unusual visit to the construction site during which the two men, clad in hard hats, bickered over the price tag for the makeover.
A significant driver of the cost is security, including blast-resistant windows and measures to prevent the building from collapsing in the event of an explosion. The Federal Reserve, the world’s most important central bank, makes independent monetary policy decisions and its board members typically serve under both Republican and Democratic presidents.
© 2024 AFP
