IMF Chief backs Powell: Fed independence is crucial for U.S. and the globe

 

According to reports, on Thursday local time (15th), IMF Managing Director Kristalina Georgieva stated that central bank independence is vital for economic operation and publicly supported Fed Chair Jerome Powell, who is currently facing an investigation by the Trump administration.

 

In an interview that day, Georgieva pointed out that there is ample evidence showing that central bank independence and decision-making based on facts and data serve the interests of businesses and households, benefiting overall economic stability. She expressed that she had worked with Powell, highly recognized his professionalism, and noted his high prestige among international central banking peers.

 

"I have worked with Jerome Powell. He is a very fine professional, a man of great integrity, and I think his reputation among his colleagues speaks for itself," she added.

 

Georgieva’s remarks come as U.S. prosecutors are conducting a criminal investigation into testimony Powell gave last summer regarding a renovation project at the Federal Reserve building. Powell confirmed he has been informed that the U.S. Attorney’s Office in Washington, D.C., is investigating whether he made false statements to Congress last June regarding a high-cost renovation project at the Fed’s headquarters.

 

Powell has also called the investigation a pretext, part of an ongoing campaign by President Trump to pressure the Fed to lower interest rates and end the central bank's independence.

 

The investigation has sparked widespread criticism not only from key Republican members within the U.S. Senate but also strong opposition from economic officials of multiple countries, investors, and former U.S. government officials from both parties.

 

Trump has repeatedly criticized the Fed under Powell’s leadership and attacked Powell for what he perceives as the Fed Chair's slow action in lowering interest rates. On Wednesday, Trump also dismissed concerns that undermining central bank independence would hurt the dollar's value and trigger inflation, telling the media: "I don't care."

 

Regarding this, Georgieva stated that the IMF has carefully studied issues such as monetary and financial stability as well as the strength of a country's institutions. Given the dollar's role as a reserve currency, the organization pays special attention to the Federal Reserve.

 

"The hope is to see someone who can recognize... the Fed is extremely important for Americans. It is very important for the rest of the world," she said.

 

In addition, Trump has attempted to fire another Fed official—Governor Lisa Cook. She has filed a legal challenge regarding her dismissal, which is set to be heard by the Supreme Court next week.

 

On the same day, Fed Vice Chair for Supervision Michael Barr also stated that the Justice Department's criminal investigation into the Fed and the White House's allegations against Governor Lisa Cook amount to an "attack on the Fed's independence."

 

"I think these are just a few examples of the challenges to the Fed's independence," he said.

 

Despite the pressure, Barr emphasized that the Fed acts "entirely for economic reasons. We are simply acting according to the mandate given by Congress to ensure price stability and maximum employment. That has always been our focus and will continue to be our focus."