Central bankers are rallying around Fed Chair Jerome Powell as he faces a DOJ probe

Global central bankers have publicly rallied behind Jerome Powell after the U.S. Justice Department launched a criminal investigation into the head of the Federal Reserve, warning that political pressure on the central bank threatens economic stability. 

In a rare joint statement issued Tuesday, senior officials from Europe, the UK and Canada said they stood “in full solidarity” with Powell and the Fed. They said the independence of central banks was essential to maintaining trust supporting the wider global economy. 

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

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

Those signing the statement included Christine Lagarde of the European Central Bank, Andrew Bailey, and Tiff Macklem, along with central bank leaders from Australia, Switzerland, Sweden, Denmark, Brazil, South Korea, and Norway. Japan’s central bank chief did not sign, saying it does not comment on the actions of other central banks. 

The unusual show of unity highlights how seriously global policymakers view the situation. Joint statements of this kind are rare and are typically reserved for moments of broad financial stress, rather than for backing a single central bank leader.

Powell said in a video statement Sunday evening that the DOJ had served the Fed with grand jury subpoenas on Friday related to testimony that Powell delivered to the Senate Banking Committee in June, regarding ongoing renovations of the Fed's aging headquarters in Washington. The investigation marks a staggering escalation of President Donald Trump's almost year-long campaign to strong-arm the central bank into dramatically lowering interest rates.

“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public,” Powell said, adding that the case raises broader questions about whether the Fed can continue to operate without political influence. 

It comes after thirteen influential economists, including former Federal Reserve chairs and ex-Treasury secretaries, raced to Powell's defense on Monday. They included the three living ex-Fed chairs Alan Greenspan, Ben Bernanke, and Janet Yellen; ex-Treasury secretaries Timothy Geithner, Jacob Lew, and Henry Paulson; and other top economists who served in Republican and Democratic administrations. 

They called the probe into Powell an “unprecedented attempt to use prosecutorial attacks to undermine that independence,” the group wrote in a statement. “This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly.”