Leaders of major global central banks have publicly defended Federal Reserve Chair Jerome H. Powell following recent political threats from former U.S. President Donald Trump. On March 5, 2024, the heads of the European Central Bank, the Bank of England, the Bank of Canada, and the Reserve Bank of Australia, among others, issued a rare joint statement emphasizing the importance of central bank independence.
The joint statement highlighted that Powell has acted with integrity and that maintaining independence is essential for ensuring price stability and overall economic health. “We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell,” the central bankers declared. They stressed that central bank independence is a foundational element for price, financial, and economic stability, ultimately serving the interests of the citizens.
The context of this support arises from a U.S. investigation that has been met with skepticism from both financial sectors and some members of Trump’s Republican Party. Central bankers are concerned that political interference in the Federal Reserve could undermine public trust in its ability to meet inflation targets. This erosion of trust could lead to higher inflation rates and increased volatility in global financial markets.
Given that the United States operates as the world’s dominant economy, any resulting inflation could be transmitted through financial markets, complicating the ability of other central banks to maintain their own price stability. The statement continued, “It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability.”
The joint declaration was signed by the leaders of central banks from countries including Sweden, Denmark, Switzerland, South Korea, Brazil, and France, as well as the chair of the Bank for International Settlements, which serves as a cooperative body for central banks worldwide. A source indicated that additional central bankers were invited to join the statement after its release.
This unified front from global central bank leaders underscores the critical role that central banks play in the global economy, particularly in times of political uncertainty. As discussions around central bank policies evolve, the call for independence remains a central theme in preserving economic stability and public confidence in financial institutions.
