In response to his testimony last summer regarding the Fed’s building renovations, Federal Reserve Chair Jerome Powell stated on Sunday that the Department of Justice has served the central bank with subpoenas and threatened to file a criminal indictment.
President Donald Trump’s conflict with the Fed, an independent organization he has frequently criticized for not lowering its main interest rate as much as he would like, has escalated to an unprecedented degree with this action. Financial markets will probably be shaken by the fresh conflict on Monday, and it may eventually result in higher borrowing costs for mortgages and other loans.
According to the Fed chair, the subpoenas are related to Powell’s June testimony before the Senate Banking Committee. The hearing focused on the Fed’s $2.5 billion (€2.14 billion) refurbishment of two office buildings, a project that Trump has deemed exorbitant.
Powell on Sunday rejected Trump’s criticism and personal insults, which he has largely disregarded up until now. Rather, Powell bluntly described the prospect of criminal charges as merely “pretexts” to compromise the Fed’s independence in determining interest rates in a video statement.
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