For years, central banks around the world have stressed the importance of operating free from political pressure, arguing that independence is essential to economic stability. That principle moved to the forefront this week as U.S. Federal Reserve Chair Jerome Powell became the subject of a criminal investigation tied to a costly renovation project at the central bank’s headquarters in Washington.
The probe focuses on a $2.5 billion overhaul of the Federal Reserve’s main building and Powell’s related testimony before Congress. Powell confirmed Sunday that federal prosecutors are examining the matter, which has intensified scrutiny of the Fed at a time of heightened political tension over interest rate policy.
Powell has faced sustained pressure from U.S. President Donald Trump to aggressively cut rates. In a video statement shared on the Fed’s official X account, Powell suggested the investigation is rooted in that dispute.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said.
He warned that the outcome could shape the central bank’s future role.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation,” Powell added.
Against that backdrop, global central bank leaders issued a rare joint statement Tuesday expressing support for Powell and the Federal Reserve system. The statement was signed by senior officials including European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey, along with counterparts from Brazil, Switzerland, Sweden, Denmark, South Korea, Australia and Canada.
“We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell,” the group said.
They emphasized that the issue extends beyond one individual or institution.
“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,” the statement said.
The signatories also praised Powell’s record in office.
Powell has served with “integrity, focused on his mandate and an unwavering commitment to the public interest,” they said, describing him as “a respected colleague who is held in the highest regard by all who have worked with him.”
The show of unity comes as markets and policymakers closely watch the implications of the investigation. While the probe centers on construction costs and congressional testimony, it unfolds amid a broader clash between the White House and the Fed over monetary policy direction.
Central bankers rarely intervene publicly in domestic political disputes. Their collective decision to speak out underscores concern that legal or political pressure on the Fed could undermine confidence in its independence, with potential consequences for financial markets and global economic stability.
As the investigation proceeds, Powell remains in office, and the Federal Reserve continues to set policy. The extent to which the legal challenge affects the institution’s autonomy now stands as a key question not just for the United States, but for central banks worldwide.
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