Global central banks publicly defend Fed Chairman Jerome Powell
The global financial community has issued an unprecedented joint statement in defence of US Federal Reserve Chairman Jerome Powell. The document, released on Tuesday 13 January, was signed by the heads of ten leading central banks, emphasising that the independence of regulators is a key condition for price and financial stability. It is reported by The Public with reference to Politico.
The statement says that the bank stands in full solidarity with the Federal Reserve and its chairman. The bankers stressed that the autonomy of central banks serves the interests of citizens and must be maintained with respect for the rule of law and democratic accountability. The reason for this reaction was the events in the United States, where Powell announced that he had received a grand jury subpoena from the Department of Justice in a case related to the reconstruction of the Fed building in Washington. The Fed chairman himself publicly called these actions politically motivated and aimed at putting pressure on interest rate decisions.
The signatories to the statement include European Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey, and central bankers from Canada, Switzerland, Sweden, Denmark, Australia, South Korea, and Brazil. They were also joined by the heads of the Bank for International Settlements, often referred to as the "bank of central banks."
Economists say that the possible subordination of the Fed to the direct control of the White House could have global implications. The dollar remains the base currency of the global financial system, and political pressure on the US regulator could trigger a rise in inflation in the US and a wave of rate hikes in other countries. The markets are already reacting with fluctuations in the dollar and rising long-term bond yields.
Support for Powell came not only from abroad. In the US, five former finance ministers and all living ex-Fed chairmen, as well as heads of major financial corporations, made a separate statement. They warned that undermining the independence of the central bank is typical of countries with weak institutions and has long-term negative consequences for the economy.
Source and photo: Politico.
Powell, Lagarde, Bailey
