With Jerome Powell being targeted by the Trump Administration due to his refusal to submit to Donald Trump’s interest rate demands, the heads of many central banks are rallying behind him.
Sunday evening, U.S. Federal Reserve Chairman Jerome Powell released the following video, revealing he was the target of a politically-motivated criminal investigation:
Following Powell’s remarks, there has been growing concern in the political and finance worlds about the erosion of U.S. central bank independence and the danger of such politically-motivated investigations.
And now, the heads of numerous central banks, including Bank of Canada Governor Tiff Macklem, have released a statement expressing support for Macklem and the principle of central bank independence. The statement can be read below:
“We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell. 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. 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.
Christine Lagarde, President of the European Central Bank on behalf of the ECB Governing Council
Andrew Bailey, Governor of the Bank of England
Erik Thedéen, Governor of Sveriges Riksbank
Christian Kettel Thomsen, Chairman of the Board of Governors of the Danmarks Nationalbank
Martin Schlegel, Chairman of the Governing Board of the Swiss National Bank
Ida Wolden Bache, Governor of Norges Bank
Michele Bullock, Governor of the Reserve Bank of Australia
Tiff Macklem, Governor of the Bank of Canada
Chang Yong Rhee, Governor of the Bank of Korea
Gabriel Galípolo, Governor of the Banco Central do Brasil
Lesetja Kganyago, Governor of the South African Reserve Bank
Anna Breman, Governor of the Reserve Bank of New Zealand
François Villeroy de Galhau, Chair of the Board of Directors of the Bank for International Settlements
Pablo Hernández de Cos, General Manager of the Bank for International Settlements
Note: Other central banks may be added to the list of signatories later on.“
An important move
As the U.S. President seeks to concentrate power, other politicians in other nations may be tempted to do the same. Yet whatever short-term justification is given for imposing more overt political control over central banks, history shows this does not end well, as long-term financial stability is sacrificed for short-term political gain, often leading to rampant inflation far and above even the recent high levels of inflation following the pandemic.
It is good to see the head of Canada’s central bank adding his name to those backing Powell. Protecting the integrity and independence of core institutions remains essential to protecting democracy and ensuring that power is diffused.
Spencer Fernando
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