WASHINGTON: A US federal judge has quashed subpoenas issued to the Federal Reserve as part of an investigation that Fed chair Jerome Powell has called an attempt by the Trump administration to intimidate the independent central bank.
“A mountain of evidence suggests that the Government served these subpoenas on the Board to pressure its Chair into voting for lower interest rates or resigning,” wrote Judge James Boasberg in a filing dated Mar 11.
“The Court therefore finds that the subpoenas were issued for an improper purpose and will quash them.”
The documents were made public Friday. The Justice Department’s investigation was linked to the cost of renovations at the Fed’s headquarters.
US prosecutor Jeanine Pirro swiftly responded, saying the Trump administration would appeal the order.
“This is the antithesis of American justice. Exonerating anyone without any records, without an investigation or question, is not how our criminal justice system works,” Pirro told reporters.
“No one, folks, is above the law, and this outrageous decision will be appealed by the United States Department of Justice,” she said.
US President Donald Trump has repeatedly insulted Powell over the central bank’s policies on setting the economy’s key interest rate.
In January, Powell revealed that the Justice Department had launched a probe linked to cost overruns in the Fed’s renovations.
The investigation was unprecedented, and Powell released a statement saying it was meant to intimidate him and the Fed.
“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,” he said at the time.
On Friday, Judge Boasberg’s order was scathing in its criticism of Pirro’s office.
“The Government has produced essentially zero evidence to suspect Chair Powell of a crime; indeed, its justifications are so thin and unsubstantiated that the Court can only conclude that they are pretextual.”
The Fed did not comment on the issue when queried by AFP.
REPEATED TRUMP ATTACKS
Trump has been vocal about his preferences for lower interest rates, criticizing Powell and attempting to unseat another Fed Governor, Lisa Cook, over mortgage fraud allegations.
In January, the US Supreme Court appeared skeptical of Trump’s attempts to fire Cook, with a majority of judges expressing doubts that the administration had shown sufficient cause to remove her.
Republican Thom Tillis of the Senate Banking Committee recently vowed to oppose the confirmation of Fed nominees – including the next chairman – until the Justice Department probe against Powell is resolved.
That would hold up Trump’s nomination for the next Fed chair when Powell’s term is up in May.
“This ruling confirms just how weak and frivolous the criminal investigation” of Powell is, Tillis wrote on social media Friday.
“Appealing the ruling will only delay the confirmation of Kevin Warsh as the next Fed Chair,” he said on X.
The Fed cut rates three times last year but held off on further reductions in January as policymakers walk a tightrope, balancing inflation risks alongside labor market worries.
Its rate-setting committee will hold a meeting next week, with analysts expecting it to keep rates unchanged amid economic turmoil from the US-Israeli war on Iran and recent economic data.