Global Central Bankers Rally Behind Jerome Powell

Central bank leaders from ten countries have issued a statement of full solidarity with Federal Reserve Chair Jerome Powell. This support follows Powell's disclosure that the Justice Department issued grand jury subpoenas to the Federal Reserve. The international letter describes Powell as a man of integrity and a respected colleague. It emphasizes that the independence of central banks is a cornerstone of economic stability. The letter was signed by heads of the European Central Bank, the Bank of England, and central banks in Sweden, Denmark, Switzerland, Australia, Canada, South Korea, and Brazil. Domestically, former Fed chairs and Treasury secretaries have also condemned the subpoenas. They labeled the investigation an unprecedented attempt to use prosecutorial attacks to undermine the Fed's independence. The events highlight a growing conflict regarding monetary policy between the central bank and the current administration.

Global financial leaders have formally rallied around Jerome Powell amidst the ongoing controversy. On Tuesday, a letter cosigned by the heads of 10 global central banking institutions was released. The document strongly defended Powell's integrity. It referred to him as a "respected colleague held in the highest regard by all who have worked with him."

The signatories of the letter represent major financial institutions across the globe. The statement was signed by Christine Lagarde, head of the European Central Bank, and Andrew Bailey, the Bank of England chief. Additionally, central bank bosses from the following nations signed the letter:

• Sweden
• Denmark
• Switzerland
• Australia
• Canada
• South Korea
• Brazil

The letter also included signatures from the chair and general managers of the Bank for International Settlements. The group explicitly stated their support for the Federal Reserve System and its chair. They argued that preserving the independence of central banks is critical for price, financial, and economic stability. The signatories stressed that this independence must be maintained with full respect for the rule of law and democratic accountability.

The international support letter was triggered by recent actions taken by the Department of Justice. On Sunday, Powell revealed that the Federal Reserve had been served with grand jury subpoenas. This development is widely viewed as the latest escalation in an ongoing dispute between the central bank and the administration regarding the path of interest rates.

Powell addressed the situation in a video statement, acknowledging the legal process while criticizing the context. He stated, "No one — certainly not the chair of the Federal Reserve — is above the law." However, he immediately added, "But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure."

Powell has a history of abstaining from directly engaging with personal attacks. Despite the pressure, the international letter maintains that Powell has served with integrity. The letter asserts that he has remained focused on his mandate and committed to the public interest. The subpoenas represent a significant shift from typical interactions between the White House and the central bank.

While international leaders offered support, domestic figures in the United States also mobilized behind Powell. On Monday, a group of senior figures in US economics and monetary policy released a statement. This group included all three living former heads of the Federal Reserve and five former Treasury secretaries.

The domestic statement described the Justice Department's investigation as "an unprecedented attempt to use prosecutorial attacks to undermine" the independence of the Fed. The group argued that such actions have no place in the United States. They emphasized that the rule of law is the country's greatest strength and the foundation of its economic success. The coordinated defense from both international and domestic financial leaders underscores the severity of the situation. It highlights the importance placed on the autonomy of the Federal Reserve in global financial markets.