Central banks across the world have issued a rare joint statement declaring their “full solidarity” with US Federal Reserve Chair Jerome Powell following the launch of a criminal investigation into him by the US Department of Justice.
The statement, signed by 11 senior central bank leaders including the heads of the Bank of England, the European Central Bank and the Bank of Canada, underscored the importance of safeguarding central bank independence in the setting of interest rates.
“Chair Powell has served with integrity, focused on his mandate and with an unwavering commitment to the public interest,” the statement said.
The US Justice Department is conducting the investigation, which is linked to testimony Mr Powell gave before a Senate committee regarding renovations to Federal Reserve buildings. President Donald Trump has said he was unaware of the probe.
The investigation comes after a year of sustained criticism of Mr Powell by President Trump, who has repeatedly urged the Federal Reserve to cut interest rates more aggressively. Beyond policy disagreements, the president has also made personal attacks on the Fed chair, referring to him as a “major loser” and a “numbskull”.
In their statement, the global central bank leaders described Mr Powell as “a respected colleague who is held in the highest regard by all who have worked with him”.
Until recently, Mr Powell had largely refrained from responding publicly to the criticism. However, on Sunday he warned that the independence of the Federal Reserve was under threat.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether monetary policy will instead be directed by political pressure or intimidation,” he said.
The Federal Reserve has cut interest rates three times since September, leaving its benchmark rate at about 3.6%. However, policymakers remain divided over further cuts, with concerns that additional easing could fuel inflation.
Official figures released on Tuesday showed consumer prices rose 2.7% in the 12 months to December, unchanged from November and still above the Fed’s 2% inflation target.
In their joint statement on Tuesday, the central bank leaders stressed that independence is essential for economic stability.
“The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve,” they said. “It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability.”
Mr Powell, who was nominated as Fed chair by President Trump in 2017 during his first term, is due to step down in May. The president is expected to announce his successor in the coming weeks.
Several Republican lawmakers have also raised concerns about the investigation. North Carolina Senator Thom Tillis, a member of the Senate Banking Committee, said he would block confirmation of any nominee to replace Mr Powell until the matter is “fully resolved”.
Another committee member, Senator Kevin Cramer, said while he believed Mr Powell had been a poor Fed chair, he did not consider him a criminal and called for a swift investigation to restore confidence in the institution.
Republican Senator Lisa Murkowski described the probe as “an attempt at coercion”.
Mr Powell has also received backing from three former Federal Reserve chairs — Janet Yellen, Ben Bernanke and Alan Greenspan — along with several other former senior officials.
Ms Yellen, who succeeded Mr Powell as Fed chair, said the criminal investigation was “extremely chilling” and warned that it could unsettle investors.
“You have a president saying the Fed should cut rates to reduce interest payments on the federal debt,” she said in an interview with CNBC. “That is the road to a banana republic.”
The full list of signatories includes:
- Andrew Bailey, Governor of the Bank of England
- Christine Lagarde, President of the European Central Bank
- Erik Thedéen, Governor of Sveriges Riksbank
- Christian Kettel Thomsen, Chairman of Danmarks Nationalbank
- Martin Schlegel, Chairman of the Swiss National Bank
- Michele Bullock, Governor of the Reserve Bank of Australia
- Tiff Macklem, Governor of the Bank of Canada
- Chang Yong Rhee, Governor of the Bank of Korea
- Gabriel Galípolo, Governor of the Central Bank of Brazil
- François Villeroy de Galhau, Chair of the Bank for International Settlements
- Pablo Hernández de Cos, General Manager of the Bank for International Settlements
