August M
A rare public clash has erupted between the head of the US central bank and the Trump administration, after Federal Reserve chair Jerome Powell revealed he is facing a criminal investigation linked to his testimony to lawmakers.
Powell said the inquiry marked an extraordinary escalation in long-running tensions over interest rates and the Fed’s independence.
Investigation disclosed
According to the BBC, Powell said on Sunday that the US Department of Justice had opened a criminal investigation into him and served subpoenas on the Federal Reserve.
The probe relates to testimony he gave to a Senate committee about the cost of renovating two historic Fed buildings in Washington.
Powell described the move as “unprecedented” and said he believed it stemmed from President Donald Trump’s anger at the Fed’s refusal to cut interest rates despite repeated public pressure.
The justice department has been contacted for comment.
Pushback from Powell
Until now, Trump’s feud with Powell had largely involved one-way attacks, with the president branding the Fed chair “Mr. Too Late” and a “numbskull”. Powell’s statement marked his strongest public response.
“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,” Powell said.
“I have 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, but this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure,” he added.
Trump responds
Trump said he was unaware of the investigation. “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,” he told NBC News.
The dispute centres on the renovation of the Fed’s Eccles and Constitution Avenue buildings, the first major overhaul since the 1930s.
The project includes removing asbestos and lead, but Trump has criticised the cost, putting it at $3.1bn compared with the Fed’s $2.5bn estimate.
Political reaction
Republican Senator Thom Tillis said he would oppose any new Fed nominations until the matter was resolved, warning the probe raised questions about the independence of both the Fed and the justice department.
Democratic Senator Elizabeth Warren accused Trump of trying to push Powell out and “install another sock puppet”.
Powell, first nominated by Trump in 2017, is due to step down in May. The investigation, first reported by the New York Times, could complicate the search for his successor.
Sources: BBC
