Fed's Powell says administration has threatened criminal indictment over his Senate testimony

• The DOJ served the Federal Reserve with grand jury subpoenas on Friday threatening criminal charges related to Powell's testimony before the Senate Banking Committee last June
• Powell publicly stated the legal action is a 'pretext' designed to increase pressure on him in his conflict with Trump over interest rate decisions
• The incident escalates tensions between the White House and the independent Federal Reserve over monetary policy control

Summary: Federal Reserve Chair Powell Reports Criminal Indictment Threat from Trump Administration

Federal Reserve Chair Jerome Powell revealed Sunday that the Trump administration has threatened him with criminal indictment related to Congressional testimony he delivered in June 2025. The Department of Justice served the Federal Reserve with grand jury subpoenas on Friday.

Key Developments:

• Powell characterized the legal action as a "pretext" designed to pressure him amid an ongoing dispute with President Trump over interest rate policy
• The subpoenas specifically target Powell's testimony before the Senate Banking Committee last June
• The statement was released Sunday night, marking an unprecedented escalation in tensions between the executive branch and the traditionally independent central bank

Market Implications:

This extraordinary development raises serious concerns about Federal Reserve independence, a cornerstone of U.S. monetary policy credibility. The conflict between Powell and Trump over interest rates has now escalated to potential criminal proceedings, which could:

• Undermine confidence in the Fed's ability to make policy decisions free from political interference
• Create uncertainty in financial markets regarding the future direction of monetary policy
• Potentially impact the dollar, Treasury yields, and equity markets when trading resumes
• Raise constitutional questions about the separation of powers and central bank autonomy

Context:

The dispute appears rooted in disagreements over interest rate policy, with Trump historically favoring lower rates. Powell's term as Fed Chair and the independence of the institution are now under direct threat through unprecedented legal action.

This situation represents a critical test for institutional norms and could have significant ramifications for market stability and investor confidence in U.S. economic governance.