Central bank leaders around the world, including at the Bank of Canada, are voicing their support for U.S. Federal Reserve chair Jerome Powell after he said that the U.S. Department of Justice is launching a criminal investigation into him.
Powell said in a video statement released on Sunday that he believes the Trump administration was using the DOJ to gain control over the Fed in order to influence interest rates in the United States.
The European Central Bank released a written statement on Tuesday standing in solidarity with the Fed and Powell. It was penned by the president of the ECB and co-signed by the leaders of other central banks, including governor Tiff Macklem at the Bank of Canada.
The letter underscores how it’s “critical to preserve” the independence of central banks.
U.S. President Donald Trump has been vocal in the past that he wants Powell and the U.S. Fed to be more aggressive in cutting interest rates, and even suggested he might fire Powell in the summer of 2025.
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The Fed cut interest rates in December 2025 for the third straight meeting, but Powell said it may hold rates for the next several months.
Trump’s threats have raised fears of political interference in the U.S. Fed, which is supposed to be independent from politicians in order to prevent partisan manipulations of the economy.
Central banks like the U.S. Fed have a mandate to support their national economies by adjusting monetary policy in order to ensure borrowing rates are low enough to allow businesses and consumers to afford loans easily while keeping prices for goods and services stable.
They make these decisions independently using data and expert analysis, and strictly without political influence. The fact that those decisions are made without political control forms the foundation of global investor confidence and trust in the American economy and the U.S. dollar as a reserve currency.
Without the confidence that economic decisions are being made based on independent data and evidence, that trust — which allows investors and businesses to spend money — could evaporate.
“The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve,” the central bankers said in the joint statement.
“It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability.”
A report from the International Monetary Fund that looked at dozens of central banks from 2007 to 2021 showed that “those with strong independence scores were more successful in keeping people’s inflation expectations in check, which helps keep inflation low.”
“Independence is critical,” the IMF noted in 2024.
The Bank of Canada has also been faced with political pressure in the past, with Macklem responding to letters sent by several provincial leaders in Canada in 2023 pressuring the bank to cut interest rates.
“While I am very pleased to get your perspectives on the impact of our policy decisions, instructions or requests from elected officials about how we should set interest rates could create the impression that the Bank of Canada’s operational independence is at risk. I am sure you agree that this would be unfortunate,” Macklem wrote in his responses to each of the premiers in 2023.
“Operational independence is critical to the legitimacy of the central bank, and to the effectiveness of monetary policy as a means to achieve price stability.”
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