A US federal judge on Friday blocked subpoenas issued by the Justice Department against Federal Reserve Chair Jerome Powell, according to a court filing.
The decision deals a significant blow to the department's criminal investigation into Mr Powell over congressional testimony he gave last year about cost overruns on the Fed's multibillion-dollar renovation project.
The Justice Department had served two subpoenas to the Fed's board of governors to seek records about the central bank's renovations and the testimony Mr Powell provided to Congress.
The Fed board argued the subpoenas were “part of the game plan to pressure Powell to bend to the President’s wishes or to get rid of him”, the court filing read. Mr Powell himself has argued the criminal inquiry is a pretext to cut interest rates.
“There is abundant evidence that the subpoenas’ dominant (if not sole) purpose is to harass and pressure Powell either to yield to the President or to resign and make way for a Fed Chair who will,” US District Judge James “Jeb” Boasberg wrote in the filing unsealed on Friday.
Jeanine Pirro, US Attorney for the District of Columbia, said she would appeal the decision during a news conference in which she said that Mr Powell is now “bathed in immunity”.
“What we don't accept is a judge standing in front of the door of a grand jury blocking our access,” she said during a news conference.
President Donald Trump, who maintains he was unaware of the Justice Department's investigation, has repeatedly attacked Mr Powell for not lowering interest rates at the speed or size that he has demanded.
In several attacks against Mr Powell made in interviews and on social media, Mr Trump has characterised the Fed Chair as a “numskull”, “lazy” and “stupid”, among other insults.
Some of those were featured at the top of Mr Boasberg's opinion, in which he said the President and his allies have made at least 100 statements pressuring Mr Powell to lower rates.
The ruling comes days before the Federal Reserve's next monetary policy meeting, when it is widely expected to hold interest rates steady between the range of 3.50 and 3.75 per cent amid widening uncertainty over the Iran conflict.
In his ruling, Mr Boasberg said the government provided no evidence that Mr Powell committed a crime “other than displeasing the President”.
Mr Powell's tenure as Fed chief expires in May. He has the option to remain on the Fed board as governor for an additional two years, although he has not publicly shared what his decision might be.
Mr Trump nominated former Fed governor Kevin Warsh to succeed Mr Powell to lead the central bank. Mr Trump's nominee faces several obstacles, including a Republican senator who has vowed to block the nomination from moving forward to a vote until the legal matter into Mr Powell is resolved.
The Federal Reserve declined to comment.
