Nine central banks close ranks with Powell in the face of pressure from Trump

WashingtonNine central banks issued a joint statement on Tuesday offering their "full support" to US Federal Reserve Chairman Jerome Powell in the face of pressure from Donald Trump and the recent criminal investigation that the Justice Department has opened against him. "Central bank independence is a fundamental pillar of price, financial, and economic stability, for the benefit of the citizens we serve. Therefore, it is essential to preserve this independence, with full respect for the rule of law and democratic accountability," the statement, which is quite extraordinary, reads. The document has been signed by nine governors, including the head of the Bank of England, Andrew Bailey, and the head of the European Central Bank, Christine Lagarde, and also includes the Bank of Spain, with former minister José Luis Escrivá as governor. Among the other governors who have signed the declaration are the heads of the central banks of Australia, Sweden, Denmark, Switzerland, Brazil, South Korea, and Canada. Ida Wolden Bache, governor of Norges Bank in Norway, added her name later.

The text highlights Powell's "integrity" and his "unquestionable commitment to the public interest," and describes him as "a respected colleague who enjoys the highest regard from all those who have worked with him."

Trump, who appointed Powell to lead the Fed in 2017, has been leading a pressure campaign against him for months because he has not lowered interest rates as demanded. The federal investigation against Powell, related to his testimony before Congress last June about the renovations at the Federal Reserve headquarters, comes just as his term as chairman of the US central bank is about to expire in May of this year.

For months, the US president has been leading a fierce siege to try to interfere with the independence of the central bank. Last year, he already tried to fire Governor Lisa Cook, based solely on unproven legal allegations. The attempt was blocked by a federal court, but Trump appealed the case to the Supreme Court, which will have to rule on the matter. The ruling will be decisive, and if the high court—with a conservative majority—rules in favor of the president, he will have more leeway to remove Fed governors at will, since an accusation not proven in court will be sufficient for this.

Powell's surviving predecessors, Janet Yellen, Ben Bernanke, and Alan Greenspan, also signed a joint letter on Monday with a dozen other economists to express their support for the Fed chairman. "The purported criminal investigation against Federal Reserve Chairman Jay Powell constitutes an unprecedented attempt to use fiscal attacks to undermine that independence." The text emphasized that "this has no place in the United States, whose greatest strength is the rule of law, the foundation of our economic success."

The prosecutor defends the investigation

For her part, Jeanine Pirro, U.S. Attorney for the District of Columbia (Washington, D.C.), defended the legal proceedings against Federal Reserve Chairman Jerome Powell regarding cost overruns in the renovation of the institution's headquarters, stating that these proceedings pose no "threat." "The U.S. Attorney's Office contacted the Federal Reserve on multiple occasions to discuss the cost overruns and the Chairman's testimony before Congress, but received no response, which necessitated the use of legal process, which does not constitute a threat," the U.S. Attorney asserted via social media. Mr. Powell, and no one else. “None of this would have happened if they had simply responded to our request,” added Pirro, a former judge and former Fox News host, who was appointed by Donald Trump last May as acting Washington attorney and subsequently confirmed in the position.

The White House denied on Monday that US President Donald Trump is behind the lawsuit against Federal Reserve Chairman Jerome Powell. Speaking to the press, White House Press Secretary Karoline Leavitt responded with a firm “no” to the question of whether Trump “ordered” Justice Department officials to open the criminal case against Powell.