Support Powell! Central banks from multiple countries plan to issue a joint statement, with the central bank governor stating: he "embodies the highest level of public service."
Major central banks around the world are coordinating a joint statement through the Bank for International Settlements (BIS) to support Federal Reserve Chairman Jerome Powell in response to the Trump administration's judicial pressure on central banks, threatening their independence. Several officials have voiced their support, and Powell's tough stance has unexpectedly garnered widespread public support from retail investors in the United States
On January 13, Bloomberg reported, citing informed sources, that after the Trump administration significantly escalated its pressure on the Federal Reserve, central bank officials from around the world are drafting a statement to support Federal Reserve Chairman Jerome Powell.
The informed source indicated that this joint statement is expected to be released in the name of the Bank for International Settlements (BIS) and will be open for signature by all central banks. Due to time zone differences, central bank governors will need time to finalize the wording, and the statement may be released as early as Tuesday local time.
Legal Offensive and Administrative Pressure Escalate, Powell Responds Publicly
The direct trigger for this round of controversy was the U.S. Department of Justice issuing a grand jury subpoena to the Federal Reserve and threatening to bring criminal charges against Powell regarding related matters.
In a written and video statement released last Sunday local time, Powell stated that the investigation nominally involves his testimony last June before Congress regarding the Federal Reserve headquarters renovation project, but the real background is that the administration is attempting to pressure the Federal Reserve through legal means to force concessions on its interest rate policy. He stated in the announcement:
"The threat of criminal charges is a result of the Federal Reserve setting interest rates based on our best judgment of the public interest, rather than following the president's preferences."
This statement is considered a rare direct rebuttal during Powell's tenure. Trump denied any connection to the Department of Justice's actions, claiming he was "unaware of it." However, he has long publicly criticized Powell for refusing to significantly lower interest rates and has repeatedly hinted at replacing him.
Support from Within the Federal Reserve
After the investigation news broke, voices of support began to emerge from within the Federal Reserve. Three former Federal Reserve chairs and four former U.S. Treasury Secretaries who served in both Democratic and Republican administrations strongly condemned the U.S. Department of Justice's investigation of current Federal Reserve Chairman Powell, stating that this move would undermine the independence of the Federal Reserve.
The statement was also signed by a group of bipartisan former White House economic advisors. Yellen stated on the same day that the Trump administration's investigation is "extremely chilling" for Powell's successor, and the market should be concerned.
New York Federal Reserve President John Williams stated that Powell has led the Federal Reserve during challenging times and has demonstrated "impeccable integrity," warning that any actions that undermine central bank independence could pose long-term risks.
Williams also pointed out that the current market reaction is relatively restrained, one important reason being that the outcomes of the investigation and the direction of political maneuvering remain highly uncertain.
Retail Investors Support Powell
Powell's tough stance unexpectedly received strong support from retail investors. Posts supporting Powell quickly became popular in the WallStreetBets section of the Reddit forum, known for its retail investor base. This forum gained fame during the 2021 GameStop frenzy On Monday local time, the most popular post at the forum was a video of Powell's statement. A retail investor named 4Yk9gop posted, "He is an American hero, we don't deserve him." Another user, jonneh, emphasized with passionate language: "The GOAT (Greatest of All Time) in my heart never backs down."
The near-enthusiastic support is not limited to Reddit; young investors across major social platforms have praised Powell's calm demeanor and no-nonsense style. This support is built on actual market performance. Since Powell took office in February 2018, the S&P 500 index has risen by 163%
