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Global central banks defend Powell as US launches investigation
Eleven leading central bank governors worldwide have publicly backed Federal Reserve Chair Jerome Powell following the US Department of Justice's decision to open a criminal inquiry into his conduct. The joint statement, released Tuesday, underscores the critical role of central bank independence in maintaining economic stability.
Statement highlights Powell's integrity amid political pressure
The Bank of England, European Central Bank, Bank of Canada, and eight other institutions signed the declaration, praising Powell's "unwavering commitment to the public interest" and describing him as a "respected colleague held in the highest regard." The statement emphasizes that central bank autonomy is essential for price and financial stability, warning against political interference.
Probe linked to Senate testimony on Fed building renovations
The Department of Justice's investigation centers on Powell's testimony before a Senate committee regarding renovations to Federal Reserve facilities. The probe follows a year of relentless criticism from President Donald Trump, who has repeatedly attacked Powell's monetary policy decisions and personally derided him as a "major loser" and "numbskull."
Trump, who nominated Powell as Fed chair in 2017, has publicly distanced himself from the investigation, claiming ignorance of its details. Meanwhile, Powell broke his silence over the weekend, warning that the Fed's ability to set interest rates based on economic evidence-not political pressure-was under threat.
Fed policy divides amid inflation concerns
The Federal Reserve has reduced its benchmark interest rate three times since September, bringing it to approximately 3.6%. However, policymakers remain split on further cuts, with some fearing additional reductions could fuel inflation. Official data released Tuesday showed consumer prices rose 2.7% year-over-year in December, unchanged from November and above the Fed's 2% target.
Political fallout and Republican reactions
Several Republican lawmakers have condemned the investigation. Senator Thom Tillis of North Carolina, a member of the Senate Banking Committee, vowed to block any Trump nominee for Powell's successor until the probe is "fully resolved." His colleague, Senator Kevin Cramer, acknowledged Powell's shortcomings as Fed chair but dismissed criminal allegations, calling for a swift resolution to restore confidence in the institution.
Senator Lisa Murkowski labeled the investigation "an attempt at coercion," while three former Fed chairs-Janet Yellen, Ben Bernanke, and Alan Greenspan-publicly voiced support for Powell. Yellen, Powell's immediate predecessor, told CNBC the probe was "extremely chilling," warning that politicizing monetary policy risked turning the US into a "banana republic."
Powell's tenure nears end as succession looms
Powell, whose term expires in May, is expected to be replaced by a Trump appointee in the coming weeks. The Senate Banking Committee must approve the nominee, but Tillis's opposition could delay the process. The global statement from central bankers underscores the high stakes of preserving the Fed's independence amid growing political tensions.
