In a rare show of unity, central bank chiefs from around the world have issued a joint statement declaring their “full solidarity” with U.S. Federal Reserve Chair Jerome Powell, who is facing a criminal investigation launched by the Department of Justice. The move underscores global concerns over threats to central bank independence amid political pressure from President Donald Trump.
The statement, released on Tuesday, was signed by the heads of 11 major central banks and financial institutions, including the European Central Bank’s Christine Lagarde, the Bank of England’s Andrew Bailey, and the Bank of Canada’s Tiff Macklem. They praised Powell for serving with “integrity” and an “unwavering commitment to the public interest,” emphasizing that he is a “respected colleague” held in high regard. This collective backing highlights the international financial community’s alarm over the unprecedented probe.
The criminal investigation focuses on Powell’s testimony to Congress regarding a $2.5 billion renovation of the Federal Reserve’s headquarters in Washington, D.C. Prosecutors are examining whether any laws were broken in connection with the project and Powell’s disclosures. The probe comes after a year of relentless criticism from Trump, who has repeatedly attacked Powell for not cutting interest rates more aggressively.
Trump has publicly called Powell a “major loser” and a “numbskull,” and has pushed the Fed to lower borrowing costs to reduce federal debt payments. In response, Powell broke his silence on Sunday, warning that the investigation threatens the Fed’s ability to set monetary policy based on economic evidence rather than political intimidation. He stated that the outcome will determine whether the central bank can maintain its independence.
Economically, the Fed has cut interest rates three times since September, leaving the key rate at around 3.6%, but policymakers are divided on future moves amid concerns about stoking inflation. Consumer prices rose 2.7% in December, above the Fed’s 2% target, adding complexity to rate-setting decisions. The joint statement stressed that central bank independence is crucial for price and financial stability, serving the public interest.
Political reactions have been mixed. Some Republican senators, like Thom Tillis, have vowed to oppose any Fed nominee until the investigation is resolved, potentially delaying the appointment of Powell’s successor when his term ends in May. Others, such as Kevin Cramer, criticized Powell’s performance but questioned the criminal probe, calling for a swift resolution to restore confidence.
Support for Powell extends beyond current central bankers. Three former Fed chairs—Janet Yellen, Ben Bernanke, and Alan Greenspan—have condemned the investigation, with Yellen labeling it “extremely chilling” and warning it could lead to a “banana republic” scenario where monetary policy is dictated by political whims. Their backing adds weight to concerns about institutional integrity.
Looking ahead, the solidarity statement signals a robust defense of central bank autonomy globally, but the ongoing investigation and political tensions could unsettle markets and influence the Fed’s policy trajectory. As Powell prepares to step down, the nomination process for his replacement may become entangled in broader debates over the rule of law and democratic accountability in monetary policy.
