A US federal judge has quashed subpoenas issued to the Federal Reserve as part of an investigation that Fed Chair Jerome Powell called the Trump administration’s attempt to intimidate the independent central bank.
“A mountain of evidence suggests that the Government served these subpoenas to the Board to pressure its chairman to vote for lower interest rates or resign,” Judge James Boasberg wrote in a document dated March 11.
“Therefore, the Court finds that the subpoenas were issued for an improper purpose and will vacate them.”
The documents were made public on Friday. The Justice Department investigation was related to the cost of renovations at the Federal Reserve headquarters.
U.S. Attorney Jeanine Pirro responded quickly and said the Trump administration would appeal the order.
“This is the antithesis of American justice. Exonerating anyone without any record, without an investigation or a question, is not the way our criminal justice system works,” Pirro told reporters.
“No one, my friends, is above the law, and this outrageous decision will be appealed by the United States Department of Justice,” he said.
US President Donald Trump has repeatedly insulted Powell over the central bank’s policies in setting the economy’s key interest rate.
In January, Powell revealed that the Justice Department had launched an investigation related to cost overruns in Federal Reserve renewals.
The investigation was unprecedented and Powell issued a statement saying it was aimed at intimidating him and the Federal Reserve.
“It’s about whether the Federal Reserve will be able to continue setting interest rates based on evidence and economic conditions, or whether monetary policy will instead be directed by political pressure or intimidation,” he said at the time.
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On Friday, Judge Boasberg’s order was scathing in its criticism of Pirro’s office.
“The Government has presented virtually no evidence to suspect Chairman Powell of a crime; in fact, its justifications are so weak and baseless that the Court can only conclude that they are pretextual.”
When consulted by AFP, the Federal Reserve did not comment on the matter.
Trump’s repeated attacks
Trump has been vocal about his preferences for lower interest rates, criticizing Powell and attempting to unseat another Federal Reserve governor, Lisa Cook, over allegations of mortgage fraud.
In January, the U.S. Supreme Court was skeptical of Trump’s attempts to fire Cook, with most justices expressing doubt that the administration had shown sufficient grounds to remove her.
Republican Thom Tillis of the Senate Banking Committee recently vowed to oppose the confirmation of Federal Reserve nominees (including the next chair) until the Justice Department’s investigation into Powell is resolved.
That would delay Trump’s nomination for the next Federal Reserve chair when Powell’s term ends in May.
Read moreTrump names former Federal Reserve Governor Kevin Warsh to replace Powell as head of the US central bank.
“This ruling confirms how weak and frivolous the criminal investigation is” of Powell, Tillis wrote on social media Friday.
“Appealing the ruling will only delay the confirmation of Kevin Warsh as the next chairman of the Federal Reserve,” he said on X.
The Federal Reserve cut rates three times last year but postponed further reductions in January as policymakers walk a tightrope, balancing inflation risks with labor market concerns.
Its rate-setting committee will meet next week and analysts expect it to keep rates unchanged amid economic turmoil caused by the US-Israel war against Iran and recent economic data.
(FRANCE 24 with AFP)
