The Governing Council of the ECB and the governors of some of the most important global central banks stand in defense of Jerome Powell in the dispute with US President Donald Trump and ask to preserve the independence of the Federal Reserve. «We express full solidarity with the Federal Reserve System and its Chairman Jerome Powell. Central bank independence is a fundamental pillar of price, financial and economic stability, in the interests of the citizens we serve. It is therefore essential to preserve this independence, in full respect of the rule of law and democratic accountability”, jointly declare President Christine Lagarde on behalf of the Governing Council of the ECB and the governors of the central banks of England, Canada, Australia, Switzerland, Sweden, Denmark, Brazil, South Korea and the Bank for International Settlements. President Powell, the central bank leaders underline, «has carried out his role with integrity, focusing on his mandate and with an unwavering commitment to the public interest. For us, he is an esteemed colleague and held in the highest regard by all those who have worked with him.”
The judicial investigation and the political clash
Two days ago the Fed president announced that federal prosecutors had opened an investigation into his statements to Congress and that the central bank had received subpoenas before a grand jury, with the risk of criminal indictment. The dossier concerns the testimony given to the Senate in June on the huge renovation project of the Federal Reserve buildings in Washington.
Powell has argued that the threat of criminal prosecution is being used as political leverage. In his opinion, the investigation serves to intensify the pressure of the Trump administration on monetary policy decisions and to question the autonomy of the institution. “The threat of criminal charges is a consequence of the Federal Reserve setting rates based on our best assessment of what the public needs, rather than following the President’s preferences,” comments Powell. Meanwhile, yesterday the former Fed presidents signed a joint statement condemning the proceeding. “The criminal investigation represents an unprecedented attempt to use judicial actions to undermine that independence,” they wrote in the document.
Trump’s criticisms and rate management
Since the start of his second term in the White House, Trump has subjected Powell to criticism for having maintained a rigorous monetary policy for a good part of 2025, coinciding with the start of the new season of Stars and Stripes tariffs, and then for not being in tune with the economic recipe carried out by the presidency. “He is too slow in lowering rates”, the recurring criticism of the US president.
Last year the Fed proceeded with three rate cuts from 0.25%, after a long bullish season that began with the conflict in Ukraine and the rises in energy and raw materials prices. And to think that it was Trump himself, during his first mandate, who appointed Powell as head of the US central bank, only to then soon begin to criticize him by calling him “incompetent”. While regarding the Powell proceedings, Trump observes: “I don’t know anything about it, but he’s certainly not very good at the Fed.”
The issue of succession in May
The change of leadership of the US central bank, scheduled for May this year, is a complex procedure aimed at protecting the independence of the central bank. In pole position for the succession is the head of the National Economic Council Kevin Hassett, Christopher Waller, already on the Fed board, is also spoken of as an authoritative candidate. The only certainty for now is that the Fed’s number one can be removed early only with accusations of fraud.