An unusual show of support has emerged from central bankers including in the European Union, signalling solidarity with Jerome Powell, chair of the US Federal Reserve, as he faces a potential criminal investigation. Officials from several major international central banks emphasised the importance of preserving the Fed’s independence, reflecting concern that recent developments in Washington could have broader implications for global financial stability.
Jerome H. Powell — who has led the Federal Reserve under both Republican and Democratic presidents — released a somber video in which he made clear he would fight developments and defend his integrity. Calmly and succinctly he defended his record and also the institution’s autonomy. In the video, he said:
“I have served at the Federal Reserve under four administrations, Republicans and Democrats alike. In every case, I have carried out my duties without political fear or favour, focused solely on our mandate of price stability and maximum employment.”
In every case, I have carried out my duties without political fear or favour… – Fed Chair Jerome Powell
Really about the HQ at all?
The investigation by the US Department of Justice (DOJ) involves grand jury subpoenas related to Powell’s testimony before the Senate Banking Committee about cost overruns on renovations to the Fed’s historic headquarters. While the subpoenas raise the possibility of criminal charges, Mr Powell and his supporters, as well as outside observers, maintain that the inquiry is connected to broader political pressure on the Fed’s monetary policy decisions, rather than the renovation project itself. Many see it falling within the pattern of the current US administration and Mr Trump himself to ignore democratic norms, cross previous boundaries, and exert maximal pressure at whim. Mr Powell countered that the moves were not about his Fed buildings testimony at all but something far more serious. Intimidation and threat of criminal charges to hack away at the Fed’s independence.
“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”
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All living former Fed chairs have publicly expressed alarm over the investigation, describing it as an unprecedented challenge to the institution’s independence. They emphasised that attempts to politicise central banking can undermine economic stability and have historically contributed to higher inflation in other countries.
Response to Powell video statement
Across the pond, European banks and top officials such as Christine Lagarde, also expressed serious concerns and expressed full solidarity with Mr Powell in a tweet saying he had served with integrity and unwavering commitment. Even more importantly, it lay at investigators’ doors the need to uphold full respect for the rule of law and democratic accountability.
Within the US, some lawmakers also expressed concern, saying they might delay nominations to the Federal Reserve until legal matters surrounding Powell are resolved. Economists warned that politicising interest rate decisions could destabilise markets and increase the risk of inflationary pressures reminiscent of past decades.
Mr. Powell’s term as chair expires in May, though he could remain on the Fed’s Board of Governors until 2028. The ongoing investigation, along with discussions of potential successors, will likely shape both the Fed’s leadership and public perceptions of central bank independence in the United States for the foreseeable future.
