Global Central Bank Chiefs Plan Statement Of Support For Fed's Powell

(MENAFN- Khaleej Times)

Global central bank officials are planning to release a coordinated statement of support for US Federal Reserve Chair Jerome Powell on Tuesday after the Trump administration threatened him with a criminal indictment, two sources said.

The statement, which is expected to contain the signatures of central bankers from around the world, will back Powell and stress the need for independent central banking, the sources, who asked not to be named, told Reuters.

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The statement, tweaked extensively over the past day, is still in the works and it was unclear how many would initially sign it, but all would be welcome to join later, one of the sources said.

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The US administration's criminal probe is formally about the renovation of the Fed's headquarters but Powell called it a "pretext" to win presidential influence over interest rates.

The move has already drawn criticism from the world of finance and also from key members of Trump's Republican Party.

Central bankers fear that political influence over the Fed would erode trust in the bank's commitment to its inflation target. This would lead to higher inflation and global financial market volatility.

Since the US it the world's dominant economy, it would likely export this higher inflation via financial markets, making it more difficult for other central banks to keep prices stable.

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