Leaders of the world’s central banks have rallied behind US Federal Reserve Chairman Jerome Powell, warning that political pressure on the Fed could threaten financial and economic stability around the world.
In a joint statement released On Tuesday, the governors of 11 major central banks said they “express full solidarity with the Federal Reserve System and its Chairman Jerome H. Powell,” emphasizing the importance of central bank independence.
The statement was issued after U.S. authorities launched an investigation into Powell over a $2.5 billion renovation of the Fed’s headquarters, which increased tensions between the central bank and the Trump administration.
The signatories include the President of the European Central Bank, Christine Lagarde, the Governor of the Bank of England, Andrew Bailey, the Governor of the Bank of Canada, Tiff Macklem, and the leaders of the central banks of Sweden, Denmark, Switzerland, Norway, Australia, South Korea and Brazil. The statement was also signed by senior officials of the Bank for International Settlements.
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Fed pressure could enhance volatility and strengthen Bitcoin
Farzam Ehsani, CEO of cryptocurrency exchange VALR, said the situation sends mixed signals to digital asset markets.
“Central bank independence is traditionally considered a pillar of macroeconomic stability,” Ehsani said in a note shared with Cointelegraph. “Any attempt to exert political influence affects investor confidence. In the case of cryptocurrencies, weaker confidence in dollar policy may increase interest in decentralized assets, but sudden political shocks also increase volatility and short-term outflows from risky assets,” he added.
Ray Youssef, CEO of crypto app NoOnes, said the dollar has weakened while the price of gold and silver has risen, suggesting investors are shifting to perceived unthreatening havens.
“A rate cut could increase liquidity and support cryptocurrency prices,” Youssef said. “But for now, the market remains volatile, with Bitcoin seeing selling pressure during US trading hours despite long-term interest,” he added.
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Trump allies are lining up as potential successors to Powell
US President Donald Trump has named several committed allies as Powell’s potential successors, many of whom have publicly supported cutting interest rates. Kevin Hassett, Trump’s senior economic adviser and widely seen as the leading candidate, said Trump’s personal views on interest rates would not have a direct impact on Fed decisions.
The administration has already strengthened its influence in the central bank. Last year, Stephen Miran, a close Trump ally, was appointed to the Fed’s board of governors. At its first meeting in December, Miran pushed for a 0.5% rate cut, an early sign of a more dovish stance from Trump-aligned officials.
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