Central bank leaders from around the world have come to the defense of Fed Chairman Jerome Powell who said he’s the subject of a criminal probe by the U.S. Department of Justice.
The global central bankers issued a statement Tuesday.
“We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell,” central bank chiefs including European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey, said in the joint statement.
“The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve. It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability,” they said.
The statement added that Powell. whose term as chair ends in May, has served with “integrity, focused on his mandate and an unwavering commitment to the public interest.
“To us, he is a respected colleague who is held in the highest regard by all who have worked with him.”
Others who signed the statement included the central bank chiefs of Brazil, Switzerland, Sweden, Denmark, South Korea, Australia and Canada.
Powell has Been Under Pressure from the Administration
The sign of solidarity with Powell comes after the he issued a statement on Sunday evening confirming that federal prosecutors had launched a criminal investigation into the $2.5 billion renovation of the central bank’s headquarters in Washington, D.C., and his related testimony to Congress.
Powell has been under sustained pressure from President Donald Trump to lower interest rates, and he said the investigation was the result of the president’s frustration to cut rates as quickly and as much as he wanted.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said in a video statement tweeted by the Fed’s X account.
The global central bank leaders weren’t alone in supporting Powell.
Three former chairs of the Federal Reserve and other top former economic officials also made statement rebuking the DOJ for launching an investigation into Powell, saying the investigation will undermine the Fed’sindependence and hurt the U.S. economy.
The statement was posted on Substack Monday and was signed by former Fed Chairs Janet Yellen, Ben Bernanke and Alan Greenspan, as well as by former Treasury Secretaries Timothy Geithner, Jacob Lew, Henry Paulson, and Robert Rubin.
“The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence,” the signers of the statement said. “This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly.
Powell also warned that the investigation’s outcome will determine the future of the central bank’s decisions.
“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,” Powell said.
The post Global Central Bankers, Ex-Fed Chiefs Show Support for Powell first appeared on The MortgagePoint.
