Federal Reserve Chairman Jerome Powell asserted that a Justice Department criminal probe represents an attack on the central bank's independence. In a statement released Sunday, Powell indicated the investigation stemmed from the Fed's decision not to lower interest rates earlier in the year, despite repeated demands from President Donald Trump.

According to Powell, the Justice Department served the Federal Reserve with grand jury subpoenas, raising the possibility of a criminal indictment related to his testimony before the Senate in June. The testimony concerned renovations to the Fed's headquarters, which have experienced cost overruns. Powell characterized the probe as politically motivated, dismissing the renovations and his testimony as mere 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 stated. He emphasized the core issue at stake: "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 Federal Reserve operates independently of the executive branch, a structure designed to insulate monetary policy decisions from short-term political considerations. The Fed's primary mandates include maintaining price stability and maximizing employment. Interest rate decisions are a key tool used to achieve these goals, influencing borrowing costs and overall economic activity.

President Trump has frequently criticized the Federal Reserve's interest rate policies, arguing that lower rates would stimulate economic growth. These public pronouncements have raised concerns about potential political interference in the Fed's operations.

Powell noted that he has served under both Republican and Democratic administrations, implying the importance of maintaining the Fed's independence regardless of the political party in power. The Justice Department has not yet issued a public statement regarding the investigation. The investigation's current status and potential next steps remain unclear.