Global central bank leaders have rallied behind Federal Reserve Chairman Jerome Powell, warning that political pressure on the central bank risks undermining global financial and economic stability.
In a joint statement released Tuesday, the presidents of 11 major central banks said they stood “in full solidarity with the Federal Reserve System and Chairman Jerome H. Powell” and emphasized the importance of central bank independence.
The statement came after U.S. authorities opened a criminal investigation into Mr. Powell over the $2.5 billion renovation of the Federal Reserve's headquarters, a move that has heightened tensions between the central bank and the Trump administration.
Signatories include European Central Bank Governor Christine Lagarde, Bank of England Governor Andrew Bailey, Bank of Canada Governor Tiff Macklem, and the central bank leaders of Sweden, Denmark, Switzerland, Norway, Australia, South Korea and Brazil. Senior officials from the Bank for International Settlements also signed the statement.
Senator Warren criticized President Trump for targeting Powell. sauce: elizabeth warren
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Fed pressure could increase volatility and push Bitcoin higher
Farzam Ehsani, CEO of virtual currency exchange VALR, said the situation is sending mixed signals to the digital asset market.
“Central bank independence is traditionally considered a pillar of macroeconomic stability,” Ehsani said in a note shared with Cointelegraph. “Any attempt to gain political influence will affect investor confidence. In the case of cryptocurrencies, a decline in confidence in dollar policy may increase interest in decentralized assets, while sudden political shocks can increase volatility and also cause short-term outflows from risk assets,” he added.
Ray Youssef, CEO of cryptocurrency app NoOnes, said that while the dollar is falling, gold and silver are rising, suggesting investors are shifting to perceived safe havens.
“A rate cut could increase liquidity and support crypto prices,” Youssef said. “For now, however, the market remains fragile and Bitcoin is under selling pressure during US trading hours despite long-term interest,” he added.
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President Trump's allies have been named as candidates to replace Powell.
U.S. President Donald Trump has listed several loyal allies as potential successors to Powell, many of whom have publicly supported lowering interest rates. Kevin Hassett, Trump's senior economic adviser and widely seen as a front-runner, said the president's personal views on interest rates do not directly influence the Fed's decisions.
The administration has already strengthened its influence over the central bank. Last year, Stephen Milan, an ally of President Trump, was appointed to the Fed board. At their first meeting in December, Mr. Milan advocated a 0.5% rate cut, an early sign of a more dovish stance among officials allied with Mr. Trump.
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