India, Jan. 13 -- WASHINGTON, D.C., January 13 - The Trump administration escalated its pressure campaign against the Federal Reserve, threatening Chair Jerome Powell with a criminal indictment. Powell denounced the Justice Department probe as a "pretext" to influence interest rates, drawing condemnation from former Fed leaders and key Republican lawmakers and sending tremors through financial markets.

The U.S. Justice Department served the Federal Reserve with grand jury subpoenas last week. The probe ostensibly focuses on comments Powell made to the Senate Banking Committee in June about cost overruns in a $2.5 billion renovation of the Fed's Washington headquarters. Powell stated the subpoenas threaten a criminal indictment related to...