Michele Bullock and Global Central Bank Leaders Stand United in Support of Jerome Powell

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Global central bank chiefs, including Australia’s Michele Bullock, have issued a rare joint statement, backing US Federal Reserve Chair Jerome Powell.

Bullock is among 11 global central bank chiefs to have signed a statement highlighting the importance of independence in central banks, something placed under question after Powell called out the probe as intimidation meant to pressure the central bank to slash interest rates.

The leaders of 11 major central banks worldwide have issued a rare joint statement, expressing strong support for the Federal Reserve System and its Chair, Jerome H. Powell. “We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell,” they declared.

The heads of the Reserve Bank of Australia, the European Central Bank, the Bank of England, the Bank of Canada and seven other institutions said Powell had acted with integrity and that central bank independence was crucial for keeping prices and financial markets stable.

The statement emphasized the crucial role of central bank independence in maintaining price stability, financial security, and economic health, all for the benefit of the citizens they serve.

In contrast, former President Donald Trump commented on the current inflation rates, suggesting that the situation provides an opportunity for Powell to implement a significant rate cut. “We have very low inflation. That would give ‘too-late Powell’ the chance to give us a nice beautiful big rate cut,” Trump remarked.

Trump on Tuesday demanded again that Powell lower borrowing costs after a government report showed consumer prices rose 2.7 per cent in December from a year earlier, and reprised his accusations of wrongdoing over the renovations.

“Well, he’s billions of dollars over budget. So he either is incompetent or he’s crooked. I don’t know what he is, but he doesn’t, certainly doesn’t do a very good job,” Trump told reporters in Washington,

Meanwhile, Jerome Powell, the head of the U.S. central bank, is facing a criminal investigation over alleged misuse of taxpayer money due to an escalating renovation budget. This investigation is part of a prolonged dispute involving Trump.

Two men wearing hard hats and suits looking at a piece of paper.

When asked if this investigation would impact the timing of appointing a new Federal Reserve chief, Trump responded, “No.” He further indicated that an announcement regarding his decision is expected “sometime in the next few weeks.”

Asked whether the probe of Powell affects the timing of appointing a new Fed chief, Trump said: “No.”

Asked when he expects to announce that decision, Trump said: “Sometime in the next few weeks.”

Fed bank members reassert independence

Despite hopes that a leader handpicked by Trump might lead to more interest rate cuts, members of the central bank said neither Powell nor his successor would change policy suddenly to suit the president.

“All of my colleagues and I are committed to setting monetary policy, the best monetary policy for the economy at a particular time and for all Americans,” St Louis Fed President Alberto Musalem said on Tuesday.

“I don’t expect that commitment to change, regardless of who is the chair.”

Independence from government influence has been the key foundation of modern central banking.

It remained the unquestioned standard until Trump started demanding lower rates and putting pressure on individual policymakers when they failed to oblige.

The outpouring of solidarity followed pushback from several lawmakers in President Donald Trump’s Republican Party on Monday, including members of the Senate Banking Committee who have the power to block the president’s nomination of a more biddable successor to Powell.

The current Fed chief’s term ends in May. Powell revealed late on Sunday the US central bank had received subpoenas from the US Justice Department about what he told Congress regarding the US$2.5 billion (AU$3.7 billion) renovation of the Fed’s headquarters in Washington.