With the investigations against Jerome Powell, concerns about the independence of the US Federal Reserve are growing. Now leading central bank chiefs are showing solidarity with Powell, who is repeatedly attacked by President Trump.
Federal Reserve Chairman Jerome Powell, who was under pressure from US President Donald Trump, is receiving support from leading central bankers around the world. “We stand in full solidarity with the Federal Reserve System and its Chairman Jerome H. Powell,” said a statement released by the European Central Bank (ECB).
It is signed, among others, by ECB President Christine Lagarde, the British central bank chief Andrew Bailey, the head of the Swiss central bank SNB, Martin Schlegel, and Pablo Hernández de Cos, who runs the Bank for International Settlements (BIS), i.e. the central bank of central banks. The heads of the central banks of Sweden, Denmark, Australia, Canada, Korea and Brazil also support the show of solidarity.
Central banks emphasize independence
“The independence of central banks is a cornerstone of price, financial and economic stability in the interests of the citizens we serve,” the central bankers said in the statement. “It is therefore crucial to maintain this independence with full respect for the rule of law and democratic accountability.” Powell fulfilled his role with integrity and worked tirelessly to promote the public interest, the central bankers wrote.
Trump has been putting Powell under pressure for a long time
US President Trump had repeatedly demanded interest rate cuts from Powell and also insulted him. Lower interest rates would help support the US economy and make it easier to manage the growing national debt.
In an extraordinary statement, Powell recently dismissed criminal investigations against him as an attempt to influence the work of the Fed: “The threat of indictment is a consequence of the Federal Reserve setting interest rates to the best of its knowledge and belief in the public interest and not following the President’s preferences.”
Dollar has lost value, gold is rising
The public prosecutor in charge, Jeanine Pirro, reacted on platform Her agency had to resort to subpoenas because the Fed “ignored” requests for information about the costs of renovation work on the central bank’s historic building.
The constant attacks on Powell are fueling concerns in the financial markets that the Fed could no longer act independently in the future and instead be controlled politically. This is also why the dollar exchange rate against the euro has lost a lot of value. The increasing concerns of investors recently drove the price of gold to a record high.