Central bank leaders from around the world have issued an unprecedented joint statement backing US Federal Reserve chair Jerome Powell as Donald Trump’s administration moves against him, raising fears over the independence of the world’s most powerful central bank.
The statement said central bank independence is a cornerstone of price, financial and economic stability and must be preserved with respect for the rule of law and democratic accountability. It offered full solidarity to Powell, praising his integrity and his unwavering commitment to the public interest.
The declaration was coordinated by the Bank for International Settlements and signed by nine central bank governors, including Bank of England governor Andrew Bailey and European Central Bank president Christine Lagarde. Other signatories include the heads of the central banks of Australia, Sweden, Denmark, Switzerland, Brazil, South Korea and Canada, with more expected to join.
The move follows a dramatic escalation in the conflict between Trump and Powell. Earlier this week, Powell said in a video statement that the US Department of Justice was pursuing him, calling it an unprecedented action linked to political pressure over interest rates. He said he was being targeted because the Federal Reserve set rates based on what it believes serves the public, not the preferences of the president.
Trump has repeatedly attacked Powell for not cutting interest rates quickly enough, calling him a numbskull, though he now claims he knows nothing about the Justice Department investigation. The DOJ has said the case involves alleged misuse of taxpayer money, believed to be connected to renovations at the Fed’s headquarters.
Powell is due to step down in May, and Trump is expected to name a successor soon. Former Fed chairs Alan Greenspan, Ben Bernanke and Janet Yellen have already warned that the threat to Powell could have severe consequences, saying this kind of political interference is typical of fragile economies and leads to high inflation and long term instability.
