Powell blasts DOJ criminal probe as attack on Fed independence. ‘Public service sometimes requires standing firm in the face of threats’

Federal Reserve Chairman Jerome Powell called out the Trump administration for attacking the central bank’s independence, saying a criminal probe is due to the Fed’s refusal to lower rates earlier this year as President Donald Trump demanded.

He said in a statement Sunday that the Justice Department served the Fed with grand jury subpoenas, threatening a criminal indictment over his testimony before the Senate last June related to renovations on the headquarters, which has seen cost overruns.

Powell, who is typically cautious in his public remarks, was clear that the probe was political in nature and had nothing to do with the Fed renovations or his testimony, dismissing them “pretexts.”

“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,” he wrote.

“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 added that he has served under Republican and Democratic presidents “without political fear or favor,” while focusing on the Fed’s dual mandate of price stability and maximum employment.

“Public service sometimes requires standing firm in the face of threats,” he said. “I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.”

The statement came as The New York Times reported that the U.S. attorney’s office in the District of Columbia has opened a criminal investigation into Powell and whether he lied to the Senate Banking Committee about the scope of the renovation project, which had grown to $2.5 billion.

Jeanine Pirro, a longtime Trump ally who is in charge of the D.C. federal prosecutors office, signed off on the probe, sources told the Times.

For his part, Trump told NBC News that he didn’t know about the DOJ subpoenas. “I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings,” he said, referring to Powell.

“For a full year now the market has heard threats about Fed independence and it consistently shakes them off, but at some point there will be a breaking point,” Christopher Hodge, chief U.S. economist at Natixis CIB Americas, told Fortune via email. “Straws don’t break camels backs, incremental weight does.”

He also pointed out that if Powell is implicated in the probe, then the whole board will likely be implicated as well, resulting in an erosion of the Fed as a credible policymaking institution.

Hodge, who previously served as principal economist at the New York Fed, said based on the administration’s, the DOJ inquiry is “another straw on the back of the camel.”

The subpoena marks Trump’s latest attack on Powell and the Fed, which he harangued for months because it didn’t lower interest rates sooner. And when it did start easing in September, Trump said it should cut rates more.

In addition to the verbal attacks, Trump considered firing Powell and threaten to sue him over the renovation costs. Trump is also still attempting to remove Governor Lisa Cook after announcing her dismissal last year over alleged mortgage fraud. She has denied the accusation and challenged her firing. The case is now before the Supreme Court.

Meanwhile, Powell’s term as Fed chair expires in May, and Trump has said he already has someone in mind to replace him. Top candidates are Governor Christopher Waller, National Economic Council Director Kevin Hassett, and former Governor Kevin Warsh.

Powell could continue serving as a Fed governor until 2028, though previous Fed chairs had typically left the board early when their time as chair ended.

Observers expected Powell to follow that tradition, especially after the Fed reappointed the regional presidents, easing fears that Trump would purge them to stack the Federal Open Market Committee with his loyalists.

But Powell’s forceful statement against the Justice Department probe makes that less likely.

This story was originally featured on Fortune.com