Top central bankers support Fed Chair Powell in ‘full solidarity’ in clash with Trump

FRANKFURT, Germany (AP) — Central bankers from around the world said Tuesday they “stand in full solidarity” with U.S. Federal Reserve Chairman Jerome Powell, after President Donald Trump dramatically escalated his standoff with the Fed with the Justice Department investigating and threatening to bring criminal charges.

The statement, signed by nine national central bank heads, including European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey, said Powell “acted with integrity, focused on his mandate and an unwavering commitment to the public interest.”

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They added, “The independence of central banks is the cornerstone of price, financial and economic stability for the benefit of the citizens we serve. It is therefore critical that we maintain this independence, with full respect for the rule of law and democratic accountability.”

The dispute ostensibly revolves around Powell’s testimony before Congress in June about the cost of a massive renovation of the Fed’s buildings. But in a statement on Sunday, Powell abandoned his previous attempt to brush off Trump’s persistent criticism, calling the administration’s threat to file criminal charges a “pretext” in the president’s campaign to seize control of U.S. interest rate policy from technocrats at the Fed.

Trump has repeatedly criticized Powell and the Fed for not moving faster to lower interest rates. Economists warn that a politicized Fed that gives in to the president’s demands will damage its credibility as an inflation fighter and is likely to prompt investors to demand higher interest rates before investing in US Treasuries.

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The Fed’s actions have impacts around the world due to the US dollar’s role as the leading currency for commercial transactions and central bank reserves. Federal Reserve interest rate changes can affect the dollar’s exchange rate against other currencies and the value of U.S. assets to foreign investors.

Politically independent central banks have become a cornerstone of the global economy because they can easily take steps to combat inflation, such as raising interest rates, that are unpopular in the short term but maintain price stability in the long term.

Other signatories to the statement published on the ECB’s website include Erik Thedén, Governor of the Riksbank. Christian Kettle Thomsen, President of the Danish Central Bank; Swiss National Bank President Martin Schlegel; Michael Bullock, Governor of the Reserve Bank of Australia; Tiff Macklem, Governor of the Bank of Canada; Bank of Korea Governor Chang Young-ri; and Gabriel Galipolo, Governor of the Brazilian Central Bank.

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Their names were also attached: François Villeroy de Galhau, Chairman of the Board of Directors of the Bank for International Settlements, and Pablo Hernandez de Cos, Director General of the Bank for International Settlements. The Bank for International Settlements is an international organization of central banks headquartered in Basel, Switzerland.

One notable central bank that was not included in the statement is the Bank of Japan. The statement said that more signatures could be added at a later date. Bank of Japan officials could not immediately be reached for comment.