Powell said that the Justice Department, which Trump has repeatedly wielded against his political opponents, served the Federal Reserve on Friday with grand jury subpoenas related to the central bank chair's congressional testimony on Fed office building renovations.
But Powell, who was first nominated to his role by Trump in 2017, said accusations that he misled lawmakers about the scope of the renovations were a "pretext" obscuring the real reason the Justice Department is pursuing a criminal indictment.
"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," said Powell. "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 New York Times reported Sunday that the investigation into Powell was approved late last year by Trump loyalist Jeanine Pirro, a former Fox News host now serving as US attorney for the District of Columbia. Trump claimed he didn't "know anything about" the Powell investigation, but added, "He's certainly not very good at the Fed, and he's not very good at building buildings."
Powell, whose term as Fed chair ends in May, has repeatedly defied Trump in public, dismissing the president's threat to remove him from the helm of the central bank as unlawful and, at one point, fact-checking Trump to his face about the estimated cost of Fed renovations.
Powell has also publicly blamed Trump's tariff policies for driving up inflation.
"It's really tariffs that are causing the most of the inflation overshoot," Powell said last month, following the central bank's December 10 meeting. The Fed cut interest rates three times last year, bringing them down by a total of 75 basis points.
But Trump has pushed for much more aggressive rate cuts and attacked Powell—who does not have sole authority over interest rate decisions—as a "moron" and "truly one of my worst appointments."
Lisa Gilbert, co-president of the watchdog group Public Citizen, applauded Powell's "bold defense of the rule of law" and said that Fed policy "should not be subject to intimidation and bullying by Trump loyalist prosecutors."
"The Department of Justice should serve the rule of law, not the vindictive instincts of an authoritarian president," said Gilbert. "And it should never misuse its criminal enforcement powers to pursue pretextual prosecutions against the president’s political opponents or those who show a modicum of independence.”
"He is abusing the law like a wannabe dictator so the Fed serves him and his billionaire friends."
Democratic members of Congress also rose to Powell's defense.
"Threatening criminal action against a Fed chair because he refuses to do the president's bidding on interest rates undermines the rule of law, which is the very foundation for American prosperity," Rep. Ro Khanna (D-Calif.) wrote on social media.
Sen. Chris Murphy (D-Conn.) added that "no one should lose their sense of outrage about what is happening to our country."
"This is an effort to create an autocratic state. It's that plain," said Murphy. "Trump is threatening to imprison the chairman of Federal Reserve simply because he won't enact the rate policy Trump wants."
Sen. Elizabeth Warren (D-Mass.), a frequent critic of Powell and Fed rate policy during his tenure, wrote late Sunday that Trump "wants to nominate a new Fed chair AND push Powell off the board for good to complete his corrupt takeover of our central bank."
Powell's term as a Fed governor runs through January 2028. Trump's top economic adviser, Kevin Hassett, is widely seen as the president's likely pick to replace Powell as chair of the central bank.
Warren called on the Senate to "not move ANY Trump Fed nominee" amid the DOJ investigation into Powell.
"He is abusing the law like a wannabe dictator so the Fed serves him and his billionaire friends," Warren said of Trump.
