By Paul Hannon
A group of central banks from around the world issued a statement in support of Federal Reserve Chair Jerome Powell, an unprecedented step that underlines how seriously they view the threat to the independence of the U.S. institution.
The statement was issued by the heads of the European Central Bank and its counterparts in the U.K., Sweden, Denmark, Switzerland, Australia, Canada, South Korea and Brazil.
The signatories also include leaders from the Bank for International Settlements, a grouping of central banks.
"We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell," the statement said Tuesday. "The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve."
Powell on Sunday accused the Trump administration of using the threat of criminal prosecution to pressure the U.S. central bank into lowering rates.
U.S. prosecutors are investigating Powell over his testimony last summer about the central bank's building-renovation project. The Fed received grand jury subpoenas from the Justice Department on Friday that threaten a criminal indictment.
"Chair Powell has served with integrity, focused on his mandate and an unwavering commitment to the public interest," the group of central bankers said. "To us, he is a respected colleague who is held in the highest regard by all who have worked with him."
The group said it is "critical" to preserve the Fed's independence, "with full respect for the rule of law and democratic accountability."
Should the Trump administration succeed in pressuring the Fed to lower its key interest rate, economies around the world could feel the consequences.
In a speech Monday, Bank of France Governor Francois Villeroy de Galhau warned of "the possibility of a fall in the dollar if the Fed's independence is challenged." That would likely lower inflation in the eurozone and elsewhere, but also weaken exports to the U.S.
Former Fed chairs Alan Greenspan, Ben Bernanke, and Janet Yellen Monday rushed to defend Powell and the Fed's ability to set monetary policy free from political influence, calling the investigation "an unprecedented attempt to use prosecutorial attacks to undermine that independence."
Write to Paul Hannon at paul.hannon@wsj.com
(END) Dow Jones Newswires
01-13-26 0611ET
