167. U.S. Federal Reserve Chair Jerome Powell gets unprecedented support

Politically independent central banks are essential to the global economy because they can more effectively implement measures such as rate hikes to combat inflation, even when these steps are initially unpopular, as they help maintain long-term price stability.

But Donald Trump disagrees with this, and that is why he is threatening criminal proceedings against Fed char.

In an uncommon display of solidarity, central bankers worldwide expressed their full support for U.S. Federal Reserve Chair Jerome Powell, following President Donald Trump's increasingly confrontational stance toward the Fed, which included the Justice Department's probe and threats of criminal proceedings.

In a joint statement signed by numerous heads of national central banks, including the European Central Bank President and the Bank of England Governor, it was noted that Powell has acted with integrity, remained focused on his mandate, and demonstrated a steadfast dedication to the public interest.

They highlighted that central bank independence is crucial for maintaining stability in prices, finance, and the economy. Preserving this independence is vital, while also respecting the rule of law and democratic accountability.

The statement is signed by key figures such as the governor of Sweden's central bank, the chairs of Denmark's and Switzerland's central banks, the governors of the Reserve Bank of Australia, the Bank of Canada, the Bank of Korea, and Brazil's Central Bank, along with the chair of the Bank for International Settlements and its general manager.

Powell, after abandoning his earlier effort to ignore Trump's persistent criticism, described the administration's threat of criminal charges as "pretexts" in the president's effort to take control of U.S. interest-rate policy away from the Fed's technocrats.

Trump has frequently criticized Powell and the Fed for not reducing rates swiftly. Economists warn that if the Fed succumbs to political pressure and caters to the president's desires, it could damage its credibility in combating inflation. This may cause investors to demand higher yields before purchasing U.S. Treasurys.

Fed actions have worldwide impact because the U.S. dollar is the primary currency for trade and central bank reserves. Changes in the Fed's interest rates can influence the dollar's exchange rate relative to other currencies and the worth of foreign investors' U.S. assets.