Global central banks offer ‘full solidarity’ to US Fed’s Powell amid Trump threats | Federal Reserve
Global central banks have issued an extraordinary joint statement offering “full solidarity” to US Federal Reserve Chairman Jerome Powell in the face of the latest threat to his independence from Donald Trump’s White House.
“The independence of central banks is the cornerstone of price, financial and economic stability in the interests of the citizens we serve. It is therefore essential to preserve this independence, with full respect for the rule of law and democratic accountability,” the statement said.
It was signed by nine central bank governors, including Bank of England Governor Andrew Bailey and European Central Bank President Christine Lagarde. It was coordinated by the Basel-based Bank for International Settlements, which added its president and managing director to the signatories.
Other signatories to the unprecedented statement include the central bank governors of Australia, Sweden, Denmark, Switzerland, Brazil, South Korea and Canada. More names are expected to be added later Tuesday.
They are a testament to Powell’s “integrity” and “unwavering commitment to the public interest,” calling him “a respected colleague who is held in the highest esteem by all who have worked with him.”
Trump has repeatedly criticized Powell, whom he appointed in 2018, for not cutting interest rates quickly enough.
But the clash between the two men took a dramatic turn earlier this week when Powell released a strongly worded video statement saying he was being prosecuted by the U.S. Department of Justice.
He called the move an “unprecedented action.” [that] must be viewed in the broader context of the administration’s continued threats and pressures on monetary policy.
He said he was singled out because the Fed board set interest rates “based on our best assessment of what would serve the public, rather than following the president’s preferences.”
Trump, however, decided to distance himself from the investigation, saying he was unaware of it. “I don’t know,” he told NBC News.
Jeanine Pirro, the pro-Trump attorney general of the District of Columbia who launched the investigation, claimed in an article on X Monday evening that the “legal process” was “not a threat” to Powell.
“The word ‘accusation’ came out of Mr. Powell’s mouth, and no one else’s. None of this would have happened if they had simply complied with our request,” she added.
Bloomberg News reported Tuesday that Pirro did not seek approval from his superiors at the DoJ before launching the action against the Fed – but had no intention of dropping it.
Powell and his colleagues have cut interest rates three times since last summer, but Trump urged him to act more quickly and personally attacked Powell as an “idiot.”
The DoJ said the case involves “abuse of taxpayer dollars,” which is believed to be linked to costly renovations at the Fed headquarters.
Powell is expected to step down as Fed chairman in May, and Trump is expected to announce his successor in the coming weeks.
The prospect of legal action has sparked concern among some Republican lawmakers. Thom Tillis of North Carolina, who serves on the Senate Banking Committee that oversees Fed nominations, said he would not confirm any nominees “until this legal issue is fully resolved.”
Former Fed chairs Alan Greenspan, Ben Bernanke and Janet Yellen had already condemned the threat against Powell on Monday, saying the move could have “very negative consequences.”
“This is how monetary policy is made in emerging markets with weak institutions, with very negative consequences for inflation and the functioning of their economies in general,” their statement said.
