International Support for Federal Reserve Chair
The Federal Reserve Chair, Jerome Powell, has been under scrutiny lately due to a criminal investigation led by the Department of Justice (DOJ). In a show of solidarity, central bankers from around the world have issued a joint statement in support of Powell.
The Investigation
The DOJ opened a probe into Powell last week, seeking to review his testimony to the Senate Banking Committee last June regarding the renovation of the Federal Reserve headquarters. Powell claims that the move is a pressure tactic meant to undermine the Fed’s independence, as President Trump pushes to lower interest rates.
Response from International Central Bankers
In a statement posted on X, international central bankers expressed their full support for Powell and the Federal Reserve System. The statement, signed by the heads of central banks from Europe, England, Sweden, Denmark, Switzerland, Australia, Canada, South Korea, Brazil, and the Bank for International Settlements, emphasized the importance of preserving the independence of central banks. They stated that this independence is "a cornerstone of price, financial and economic stability in the interest of the citizens that we serve."
Reactions to the Probe
U.S. Attorney for the District of Columbia, Jeanine Pirro, claimed that the DOJ’s probe would not have happened if the Federal Reserve had responded to their outreach. Pirro stated that the United States Attorney’s Office contacted the Federal Reserve on multiple occasions to discuss cost overruns and the chairman’s congressional testimony but were ignored. Rep. Anna Paulina Luna (R-Fla.), who sent a criminal referral of Powell to the DOJ in July, defended her move, saying that it was not political and that Powell should be held accountable for allegedly lying to Congress.
Powell’s Reputation and Future
Powell has served under four presidential administrations and was reappointed by Trump during his first term. Despite Trump’s criticism of Powell as "too slow" in lowering interest rates, Powell’s fellow central bankers have praised him as a respected colleague who has served with integrity, judgment, and an unwavering commitment to the public interest. Powell’s term as chair is set to end in May, and Trump has said that an announcement of his successor is coming soon.
Conclusion
The investigation into Jerome Powell has sparked a debate about the independence of central banks and the role of the Federal Reserve in the US economy. While some have expressed concerns about the probe, others have defended it as a necessary step to hold Powell accountable. As the situation unfolds, it remains to be seen how the investigation will affect the Federal Reserve and the US economy. One thing is clear, however: the international community is watching closely, and the reputation of the Federal Reserve is at stake.
