Global central bank leaders rallied behind the U.S. Federal Reserve Chair Jerome Powell this week, warning that political pressure on the Fed could unsettle markets worldwide.
The response followed the Trump administration’s escalation of a criminal probe linked to a $2.5 billion renovation of the Fed’s Washington headquarters, renewing concerns over central bank independence.
In a joint statement, officials from 11 major central banks voiced they “stand in full solidarity with Powell,” stressing that independence underpins price stability, financial resilience, and public confidence.
Powell Says Fed Independence at Risk as Allies Step Forward
The statement was signed by officials from the European Central Bank, Bank of England, Bank of Canada, Bank of Korea, Swiss National Bank, and several others, describing Powell as a respected colleague who has served with a clear focus on his mandate.
The show of support followed Powell’s unusually direct public remarks over the weekend.
On January 12, the Fed chair confirmed that the Justice Department had served the central bank with grand jury subpoenas and was threatening a potential criminal indictment related to his June 2025 testimony before the Senate Banking Committee.
That testimony focused on cost overruns tied to the Fed’s multi-year headquarters renovation, which has ballooned to an estimated $2.5 billion, roughly $700 million over initial projections.
In a televised statement, Powell framed the investigation as retaliation for the Fed’s decision to keep interest rates higher than President Donald Trump has publicly demanded.
He said the threat of criminal charges stemmed from the Fed setting policy “based on our best assessment of what will serve the public, rather than following the preferences of the President.”
He also warned that monetary policy risked being directed by intimidation rather than economic evidence.
Trump denied any connection between the investigation and interest rate policy, saying that he had no knowledge of the subpoenas while criticizing Powell’s leadership, as previously reported by Cryptonews.
He described Powell as ineffective at both running the Fed and overseeing construction projects, but said he “wouldn’t even think” of using the Justice Department to pressure the central bank on rates.
The White House has maintained that the Justice Department is acting independently.
Markets Watch Closely as Powell Investigation Raises Fed Independence Concerns
The investigation has intensified a political fight that has been building for months. In July 2025, Representative Anna Paulina Luna formally referred Powell to the Justice Department over alleged false statements related to the renovation.
Senator Thom Tillis, a Republican member of the Banking Committee, said he would block confirmations of future Fed nominees until the matter is resolved, arguing that the episode now raises questions about the Justice Department’s own independence.
Democratic Senator Elizabeth Warren accused Trump of abusing prosecutorial power to bend the Fed to his will, calling the move an attack on economic governance.
Market reaction was swift but measured, with the dollar weakening, U.S. stock futures slipping, and Treasury futures rallying as investors weighed the implications of sustained pressure on the Fed.
Powell’s chair term is set to end on May 15, 2026, though his seat on the Fed’s Board of Governors runs through January 2028.
Trump has already indicated he will not renominate Powell and has said he has chosen a replacement, with National Economic Council Director Kevin Hassett widely seen as the frontrunner.
The episode fits a broader pattern of tension between the Trump administration and independent institutions.
Politico reported that Trump’s public calls for investigations into perceived adversaries have complicated past prosecutions and could weaken any future case against Powell, particularly given Trump’s long-running attacks on the Fed over rate policy.
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