European banks slam attacks on Fed boss

The heads of several European central banks have joined criticism of United States President Donald Trump's administration over its threat to indict Federal Reserve Chair Jerome Powell.

With lawmakers from Trump's Republican Party, including members of the Senate Banking Committee, also attacking the idea, the administration is facing almost universal criticism for suggesting Powell should face criminal charges for talking to Congress in June about the $2.5 billion renovation of the Fed headquarters in Washington.

Powell, whose term at the helm of the US central bank ends in May, said on Sunday he had received subpoenas from the Justice Department over his comments. The subpoenas felt like intimidation from the president, who has been trying to force him to cut interest rates, he said.

In his latest salvo, Trump told reporters that Powell was "billions of dollars over budget" and must either be "incompetent or crooked" and "certainly doesn't do a very good job".

The bosses of the European Central Bank, the Bank of England, the Bank of Canada, and eight other institutions came to Powell's defense, saying he has always acted with integrity and that the Fed must remain independent of government.

"The independence of central banks is a cornerstone of price, financial, and economic stability in the interest of the citizens that we serve," said a statement organized by the Bank for International Settlements in Switzerland and signed by Bank of England Governor Andrew Bailey and Christine Lagarde, the boss of the European Central Bank.

"It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability."

Independence stressed

The statement, which was also signed by the leaders of central banks from Australia, Brazil, Denmark, France, Sweden, Switzerland and South Korea, added: "We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell. Everyone we know believes in Fed independence."

Powell has always shown "unwavering commitment to the public interest" and is a "respected colleague who is held in the highest regard by all who have worked with him", it added.

Other major figures from the banking world have also criticized the US administration over the issue, including Jamie Dimon, the boss of JPMorgan, who said the dispute could push up the cost of borrowing.

"Anything (that) chips away" at the Fed's independence "will have the reverse consequences", he said. "It'll raise inflation expectations and probably increase (interest) rates over time."

Former leaders of the Fed, including Alan Greenspan, Ben Bernanke and Janet Yellen, have also criticized the way Powell has been treated.

earle@mail.chinadailyuk.com