Central Banks Move to Back Fed's Powell After U.S. Political Pressure

Global central bank chiefs are preparing a coordinated public statement in support of U.S. Federal Reserve Chair Jerome Powell, after the Trump administration escalated its dispute with the Fed by threatening a criminal investigation into the central bank chief.

According to sources familiar with the matter, leaders of major central banks, including the European Central Bank, Bank of England and Bank of Canada, are working on a joint message stressing the importance of central bank independence.

The statement is expected to be issued through international channels linked to the Bank for International Settlements, reflecting growing unease about political interference in monetary policy.

• Global central banks move to back Fed chair Powell amid rising US political pressure
• Dispute with Trump administration raises fears over central bank independence
• Markets watch closely as Powell faces scrutiny ahead of term end

The move follows reports that the U.S. Department of Justice has issued subpoenas connected to Powell’s congressional testimony regarding a $2.5 billion renovation of the Federal Reserve’s Washington headquarters.

Powell has said the investigation amounts to pressure aimed at forcing interest rate cuts, a demand repeatedly made by President Donald Trump as he criticizes the Fed for keeping borrowing costs high.

Financial markets and policymakers view the dispute as a test case for the independence of the U.S. central bank, a principle long regarded as critical to controlling inflation and maintaining investor confidence. Central bank officials fear that sustained political pressure on the Fed could weaken policy credibility not only in the United States but across the global financial system.

Some senior U.S. lawmakers have also expressed concern. Senate Majority Leader John Thune said the Justice Department should clearly explain the basis for its actions, warning that the Federal Reserve plays a central role in economic stability and should not be drawn into political battles. Several Republican lawmakers have privately questioned whether the investigation is warranted.

Wall Street executives have added to the criticism. JPMorgan Chase CEO Jamie Dimon said any move that undermines confidence in the Fed could lead to higher inflation expectations and increased market volatility. Other bank leaders echoed similar concerns.

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Powell’s term as Fed chair ends in May. The unfolding standoff has intensified debate over the future of U.S. monetary leadership and the durability of central bank independence at a time of heightened political pressure.