Fed’s Powell: New threat is not about his testimony or the renovation project but a pretext

Federal Reserve (Fed) Chair Jerome Powell said in a statement that  the US Justice Department has threatened criminal charges against him in connection with his Senate testimony last June, during which he discussed the estimated $2.5 billion renovation. Powell described the move as unprecedented and a direct challenge to the Fed’s independence.

Key quotes

Grand jury subpoenas were served on Friday.

New threat is not about his testimony or the renovation project but a pretext.

Testimony concerned multiyear renovation of historic buildings.

Justice Department on Friday threatened criminal indictment related to his Senate testimony last June.

I have carried out my duties without political fear or favor and will continue to do so.

Threat of criminal charges is a consequence of Fed setting interest rates based on its assessment of the public interest rather than the president's preferences.

Broader issue is whether the Federal Reserve will continue setting interest rates based on evidence and economics or be directed by political pressure and intimidation.

Market reaction

At the time of writing, the US Dollar Index (DXY) is trading around 98.95, down 0.18% on the day.