Top central bankers express ‘full solidarity’ with Fed Chair Powell
By DAVID McHUGH, AP Business Writer
FRANKFURT, Germany (AP) — Central bankers from around the world expressed their unwavering support for U.S. Federal Reserve Chair Jerome Powell on Tuesday, following President Donald Trump’s aggressive actions against the Fed, including the Justice Department’s investigation and threats of criminal charges.
In a joint statement, nine national central bank heads, including European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey, praised Powell for his integrity, commitment to his mandate, and dedication to the public interest. They emphasized the importance of maintaining the independence of central banks for the stability of prices, finance, and the economy.
The conflict between Powell and the Trump administration initially centered on Powell’s testimony to Congress regarding the renovation costs of Fed buildings. However, Powell later denounced the administration’s threat of criminal charges as a pretext for the president’s attempts to influence U.S. interest rate policy.
Trump’s repeated criticisms of Powell and the Fed for not implementing rate cuts quickly have raised concerns among economists about the potential politicization of the Fed. This could undermine the Fed’s credibility as an inflation fighter and lead to higher rates being demanded by investors before investing in U.S. Treasurys.
Given the global impact of Fed actions on the U.S. dollar and foreign investors’ assets, politically independent central banks play a crucial role in maintaining economic stability. They can take unpopular measures, such as rate hikes, to combat inflation and preserve long-term price stability.
The statement, also endorsed by other central bank leaders and officials, highlighted the significance of central bank independence in safeguarding the rule of law and democratic accountability. Notably, the Bank of Japan was not included in the statement, with the possibility of additional signatures being added later.
Overall, the joint statement underscored the vital role of central banks in the global economy and the importance of upholding their independence to ensure economic stability and financial credibility.
