Global Central Banks Rally Behind Powell Amid Fed Scrutiny

• Central banks worldwide unite behind Powell, emphasizing independence to protect the public, financial stability, and price control.

• Crypto markets feel cautious as political pressure on the Fed could fuel volatility and short-term outflows.

• Trump allies may influence Fed policy, signaling possible rate cuts and adding uncertainty to global markets.

Global central banks are standing firmly behind Federal Reserve Chair Jerome H. Powell as the U.S. investigates renovations at the Fed’s headquarters. Andrew Bailey, the governor of the Bank of England, and Christine Lagarde, the president of the European Central Bank, have stressed that maintaining the independence of central banks is essential to safeguarding the public, preserving stable finances, and controlling prices.

In addition to the ECB and the BoE, the statement was signed by the leaders of the central banks of Sweden, Denmark, Switzerland, Norway, Australia, South Korea, and Brazil. The accord, which represents the uncommon worldwide solidarity in supporting Powell, was even signed by senior BIS officials.

This comes against a background of increased tensions between the Trump government and the Fed, owing to an investigation involving a $2.5 billion renovation project at the Fed.

Implications for Crypto and Financial Markets

Crypto industry leaders reacted cautiously to the unfolding situation. Farzam Ehsani, CEO of crypto exchange VALR, said, “Central bank independence is traditionally considered a pillar of macroeconomic stability. Any attempt at political influence affects investor confidence.” He added that weakened trust in dollar policy could increase demand for decentralized assets, though sudden political shocks might boost short-term volatility and outflows.

Moreover, Ray Youssef, CEO of NoOnes, highlighted a rotation toward safe-haven assets. “The dollar has weakened while gold and silver have risen, suggesting investors are rotating into perceived safe havens,” Youssef observed.

Additionally, potential shifts in Fed leadership could influence market expectations. Trump allies are being considered to replace Powell, with Kevin Hassett emerging as a leading candidate. Hassett has publicly supported rate cuts, though he insists Trump’s views would not directly influence Fed decisions.

Furthermore, Trump has already strengthened influence at the Fed, appointing Stephen Miran last year. At his first meeting in December, Miran advocated for a 0.5% rate cut, signaling a more dovish stance from Trump-aligned officials.