Jerome Powell 'Served With Integrity': Central Bank Chiefs Voice 'Full Solidarity' With Fed Chair Amid Criminal Probe

(MENAFN- Live Mint) Central bank chiefs from around the world have come together to express their support for Federal Reserve chair Jerome Powel, saying they stand in“full solidarity” with him after the United States threatened the 72-year-old banker with criminal indictment.

The heads of the Bank of England, the European Central Bank and the Bank of Canada are among 11 senior bankers who have collectively signed a statement, stressing the importance of maintaining independence when setting interest rates.

“Chair Powell has served with integrity, focused on his mandate and an unwavering commitment to the public interest,” they said in a rare joint statement, which is seen by the BBC.

Commenting on Powell, the global central bankers said in their joint statement:“To us, he is a respected colleague who is held in the highest regard by all who have worked with him.”

Trump doesn't 'know anything' about probe against Powell

The Department of Justice is reportedly conducting an investigation against Powell. Meanwhile, President Donald Trump released a statement, noting that he did not“know anything” about the probe.

Federal prosecutors in Washington DC opened the probe against Powell, focusing on the Fed's long-running HQ renovation and whether he made misleading statements to Congress about the project's scale and cost, the New York Times reported earlier.

Also Read | Trump allies and officials fear blowback from Powell probe

The investigation comes after a year of repeated attacks on Powell by Trump. Along with criticising Powell's decisions on interest rates, Trump has also made personal remarks, calling the Fed chair a“major loser” and a“numbskull”, BBC reported.

Independence from government influence is a key principle followed by modern central banking, as it is deemed to be critical in preserving financial stability and public trust. This practice has remained the unquestioned standard for the world's biggest financial institutions, until President Donald Trump began pushing for lower interest rates and putting pressure on individual policymakers.

Central bankers slam political influence over Fed

The US inquiry into Powell has ‍already been subjected to intense criticism from the world of finance, as well as some key members of Trump's Republican Party, reflecting the severity of the situation, Reuters reported.

According to central bankers, political interference in the Federal Reserve could weaken trust in its commitment to control inflation, which can potentially lead to higher inflatio and increased volatility in global financial markets.

Also Read | Why the US Federal Reserve needs Powell to stay on now more than ever

The Fed is especially in focus because the United States is the ​world's largest economy. If inflation rises in America, it would likely export this higher inflation via financial markets, ‍making it harder for other central banks to keep their prices under control.

“It is therefore critical to preserve that independence, with full respect for the rule of law ​and democratic accountability,” the group of central bankers said.

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