Financial News: Central Bank Chiefs Back Fed Chair Jerome Powell

Central Bank Chiefs Back Fed Chair Jerome Powell In Fight With Trump

(RTTNews) - Heads of several central banks across the world expressed their support for Fed Chair Jerome Powell in his fight against the Trump administration that is threatening him with criminal charges, in an assault on central bank independence. "We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell," a group of central bank chief including the European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey said in a joint statement on Tuesday.

"The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve," the central bankers said. "It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability."

"Chair Powell has served with integrity, focused on his mandate and an unwavering commitment to the public interest," they said. "To us, he is a respected colleague who is held in the highest regard by all who have worked with him."

Other central bank governors who were part of the move to support Powell included those of Sweden and Denmark, Erik Thedéen and Christian Kettel Thomsen. They were joined by the Swiss National Bank Board Chairman Martine Schlegel, the Reserve Bank of Australia Governor Michele Bullock, Bank of Canada Chief Tiff Macklem, Bank of Korea head Chang Yong Rhee and Brazil's central bank chief Garbriel Galipolo.

The Chair of the Board of Directors of the Bank for International Settlements and the General Manager of the BIS François Villeroy de Galhau and Pablo Hernández de Cos also were involved.

The statement was issued after <a href=https://www.rttnews.com/3609693/powell-s-revelation-of-doj-subpoenas-sparks-concern-on-fed-independence.aspx?type=useco target=_blank >Powell revealed on Sunday that the U.S. central bank has been served subpoenas </a>by the Department of Justice that threaten criminal charges, raising concerns that the Trump administration is trying to undermine the institution's independence. Federal prosecutors have launched a criminal investigation of Powell over his June testimony to Congress regarding the $2.5 billion renovation project for three buildings, including the Eccles building that serves a the headquarters of the Fed.

Concerns over the central bank independence, which is considered sacred in the financial world, rattled markets as investors latched onto the "Sell America" sentiment. Gold, a safe haven, hit a new record as investors scurried for cover.

Former Fed Chairs Janet Yellen, Ben Bernanke and Alan Greenspan, as well as former Treasury chiefs Timothy Geithner, Jacob Lew, Hank Paulson and Robert Rubin also hit out against the DOJ subpoenas against Powell on Monday. They expressed concern regarding the Trump administration's efforts to undermine the Fed's independence and its impact on the U.S. economy. The action against Powell, whose term ends in May, is also seen as a message from the Trump administration to whomever succeeds him to toe the line.

Trump has been highly vocal in criticizing the Fed as he seeks a drastic lowering of interest rates and even threatened to remove Powell as well as sought a say in interest rate decisions. Trump's budget watchdog chief Russel Vought has also accused Powell of gross mismanagement of the Fed.

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