Pablo Hernández de Cos, general manager of the Bank for International Settlements and François Villeroy de Galhau, chair of the Board of Directors of the Bank for International Settlements, also signed the statement.
The statement reflected worldwide concerns that a Fed under direct White House control could upset the global economy by generating higher inflation in the U.S., requiring higher interest rates around the world, said José Manuel González Paramó, a former ECB board member and now professor at the IESE business school in Spain.
“The attacks on the Fed have a domestic impact of course — you see the effect on the dollar, you see long-term bond yields rise and so on — but they have an international application because the dollar is the anchor of global financial stability,” Gonzáles Paramó said
Over the weekend, Powell disclosed that the Fed had been served with grand jury subpoenas by the Department of Justice, raising the threat of a criminal indictment tied to his congressional testimony on the ongoing renovation of the Fed’s Washington headquarters.
In what amounted to a dramatic escalation in the standoff between the White House and the central bank, Powell used an unusually direct video message to argue that the legal action is politically motivated and part of a campaign of “intimidation,” designed to push the Fed into cutting interest rates more aggressively.
“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 language rare in its starkness for a serving Fed chair.