Federal Reserve Chairman Jerome Powell characterized a Justice Department criminal probe as an attack on the central bank's independence, asserting the investigation stemmed from the Fed's decision not to lower interest rates earlier in the year as requested by President Donald Trump. In a statement released Sunday, Powell disclosed that 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 last June concerning renovations at the Fed headquarters, which have experienced cost overruns.

Powell, typically reserved in his public statements, stated the probe was politically motivated and unrelated to the Fed renovations or his testimony, dismissing them 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 wrote. He further 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 conditionsor whether instead monetary policy will be directed by political pressure or intimidation."

The investigation centers around Powell's testimony before the Senate Banking Committee regarding cost overruns associated with the renovation of the Federal Reserve's headquarters in Washington, D.C. The Fed is an independent agency, setting monetary policy, including interest rates, with the goal of maintaining price stability and full employment. The Federal Reserve's independence from political influence is a long-standing principle intended to prevent short-term political considerations from influencing monetary policy decisions.

President Trump has repeatedly criticized the Federal Reserve and Powell for raising interest rates during his presidency and has publicly called for lower rates to stimulate economic growth. These public demands have raised concerns about political interference in the Fed's decision-making process. Powell noted he has served under both Republican and Democratic administrations, underscoring the non-partisan nature of the Federal Reserve's mission.

The Justice Department has not yet commented on the specifics of the investigation. The grand jury subpoenas suggest the investigation is ongoing, and the potential for criminal charges remains. The unfolding situation raises significant questions about the relationship between the executive branch and the Federal Reserve, and the implications for the central bank's independence.