Washington, Jan 12 (AP) Federal Reserve Chair Jerome Powell has said the Department of Justice has served the central bank with subpoenas and threatened it with a criminal indictment over his testimony about the Fed's building renovations.

The move on Sunday represents an unprecedented escalation in President Donald Trump's battle with the Fed, an independent agency he has repeatedly attacked for not cutting its key interest rate as quickly as Trump prefers.

The subpoena relates to his testimony before the Senate Banking Committee in June, Powell said, regarding the Fed's $2.5 billion renovation of two office buildings, a project that Trump criticised as excessive this summer.

In a video statement, Powell said the threat of criminal charges are “pretexts” to undermine the Fed's independence when it comes to setting interest rates.

“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,” Powell said.

The Justice Department in a statement Sunday said it can't comment on any particular case, but added that Attorney General Pam Bondi “has instructed her US Attorneys to prioritize investigating any abuse of tax payer dollars”.

A spokesperson for US Attorney Jeanine Pirro's office didn't immediately respond Sunday to a text message and phone call seeking comment.

The potential indictment has already drawn concern from one Republican senator, who said he'll oppose any future nominee to the central bank, including any replacement for Powell, until “this legal matter is fully resolved”.

“If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” said North Carolina Sen Thom Tillis, who sits on the Banking Committee, which oversees Fed nominations. “It is now the independence and credibility of the Department of Justice that are in question.” (AP) SCY SCY

Federal Reserve subpoenaed by DOJ over Powell's renovation testimony; threat of criminal charges raises independence concerns. The DOJ subpoenaed the Federal Reserve regarding Chair Powell's Senate testimony about a $2.5 billion building renovation and has threatened criminal charges; Powell characterizes the action as a pretext to undermine the Fed's independence and to apply political pressure to monetary policy, while DOJ says it prioritizes investigating alleged misuse of taxpayer funds and a senator has raised objections pending resolution.