The US Federal Reserve has been subpoenaed by the Department of Justice, the central bank's chairman, Jerome Powell, revealed in a statement on Sunday.

Powell said the Trump administration threatened him with a criminal indictment following his congressional testimony in summer regarding a Federal Reserve building renovation project.

Powell called the move a "pretext" to put further pressure on the central bank to lower interest rates faster than Fed officials deem appropriate.

What did Powell's statement say?

"I have deep respect for the rule of law and for accountability in our democracy. No ‌one — certainly not the Chair of the Federal Reserve — is above the law," Powell said in the brief statement released ‌by the US Fed.

He emphasized that this unprecedented action must be viewed within the broader context of the administration's threats and continuous pressure.

"This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress's oversight role. Those are pretexts," Powell said. 

"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 alleged.

While the White House has not responded to Powell's statement, Trump insisted he did not know about the investigation. In an interview to NBC News on Sunday, when asked if the investigation was meant to pressure the Fed to lower rates, Trump said: "No. I wouldn't even think of doing it that way." 

Escalating battle for influence over the Fed?

Since resuming office in January, US President Donald Trump had demanded the US Fed cut interest rates and blamed the institution for holding back the economy.

The grand jury subpoenas and Powell's statement mark a stark deterioration in the relationship between the US government and central bank.

Trump has even publically mused about firing Powell, despite legal protections covering the chairman of the reserve bank from being removed over policy disputes. 

Powell's second four-year term as Chairman of the US Federal Reserve will end in May.

The US Fed chairman is nominated by the President from among the Board of Governors and confirmed by the Senate. Trump could nominate the next chairman as soon as next month. 

Edited by: Dmytro Hubenko