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11 Major Central Banks Rally Behind Powell as Trump Escalates $2.5B Investigation

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Global central financial institution leaders rallied behind the U.S. Federal Reserve Chair Jerome Powell this week, warning that political stress on the Fed may unsettle markets worldwide.

The response adopted the Trump administration’s escalation of a legal probe linked to a $2.5 billion renovation of the Fed’s Washington headquarters, renewing considerations over central financial institution independence.

In a joint statement, officers from 11 main central banks voiced they “stand in full solidarity with Powell,” stressing that independence underpins value stability, monetary resilience, and public confidence.

Powell Says Fed Independence at Risk as Allies Step Forward

The assertion was signed by officers from the European Central Bank, Bank of England, Bank of Canada, Bank of Korea, Swiss National Bank, and several other others, describing Powell as a revered colleague who has served with a transparent give attention to his mandate.

The present of help adopted Powell’s unusually direct public remarks over the weekend.

On January 12, the Fed chair confirmed that the Justice Department had served the central bank with grand jury subpoenas and was threatening a possible legal indictment associated to his June 2025 testimony earlier than the Senate Banking Committee.

That testimony centered on value overruns tied to the Fed’s multi-year headquarters renovation, which has ballooned to an estimated $2.5 billion, roughly $700 million over preliminary projections.

In a televised assertion, Powell framed the investigation as retaliation for the Fed’s determination to maintain rates of interest increased than President Donald Trump has publicly demanded.

He stated the specter of legal fees stemmed from the Fed setting coverage “primarily based on our greatest evaluation of what is going to serve the general public, relatively than following the preferences of the President.”

He additionally warned that financial coverage risked being directed by intimidation relatively than financial proof.

Trump denied any connection between the investigation and rate of interest coverage, saying that he had no knowledge of the subpoenas whereas criticizing Powell’s management, as beforehand reported by Cryptonews.

He described Powell as ineffective at each working the Fed and overseeing building initiatives, however stated he “wouldn’t even suppose” of utilizing the Justice Department to stress the central bank on rates.

The White House has maintained that the Justice Department is performing independently.

Markets Watch Closely as Powell Investigation Raises Fed Independence Concerns

The investigation has intensified a political battle that has been constructing for months. In July 2025, Representative Anna Paulina Luna formally referred Powell to the Justice Department over alleged false statements associated to the renovation.

(*11*), a Republican member of the Banking Committee, said he would block confirmations of future Fed nominees till the matter is resolved, arguing that the episode now raises questions in regards to the Justice Department’s personal independence.

Democratic Senator Elizabeth Warren accused Trump of abusing prosecutorial energy to bend the Fed to his will, calling the transfer an assault on financial governance.

Market response was swift however measured, with the greenback weakening, U.S. inventory futures slipping, and Treasury futures rallying as traders weighed the implications of sustained stress on the Fed.

Powell’s chair time period is about to finish on May 15, 2026, although his seat on the Fed’s Board of Governors runs by way of January 2028.

Trump has already indicated he won’t renominate Powell and has stated he has chosen a replacement, with National Economic Council Director Kevin Hassett widely seen as the frontrunner.

The episode matches a broader sample of pressure between the Trump administration and impartial establishments.

Politico reported that Trump’s public requires investigations into perceived adversaries have difficult previous prosecutions and will weaken any future case in opposition to Powell, significantly given Trump’s long-running assaults on the Fed over charge coverage.

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