The head of the IMF supports Jerome Powell, the freedom of the US Fed amid the pressure of Trump – National
International Monetary Fund chief Kristalina Georgieva on Thursday stressed the importance of keeping central banks independent and backed frustrated Federal Reserve Chairman Jerome Powell, who is facing an investigation by the Trump administration into rising stimulus costs.
Georgieva told Reuters in an interview that there is ample evidence that central bank independence has worked for the benefit of businesses and households, and that evidence-based, data-driven decision-making is good for the economy.
The IMF director said he has worked with Powell and respects his expertise.
“I have worked with Jay Powell. He is a very efficient person, very honorable, and I think his standing among his colleagues tells the story,” he said, when asked about the letter of support signed by his predecessor, Christine Lagarde, who is now the head of the European Central Bank, and other major central banks.
Powell on Sunday revealed that the Trump administration has opened an investigation into him regarding cost overruns of a $2.5 billion project to renovate two historic buildings at the Fed headquarters in Washington.
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Powell denies that he is doing anything wrong and has called these unprecedented actions as an excuse to put pressure on him not to bow to the demands of American President Donald Trump, who has been doing it for a long time, that the interest rate should be reduced significantly.
This investigation has sparked strong criticism from some prominent members of Trump’s Republican Party in the US Senate, who must be sure that his nominee will take over from Powell, as well as foreign economic officials, investors and former US government officials from both political parties.
Trump has repeatedly mocked Powell’s leadership of the Fed and attacked him, often personally, for what he sees as the Fed chairman’s slowness to lower interest rates. On Wednesday, he dismissed concerns that undermining the central bank’s independence would devalue the U.S. dollar and fuel inflation, telling Reuters, “I don’t care.”
Georgieva said the IMF is paying close attention to issues such as fiscal and financial stability, as well as the strength of country’s institutions. It was of particular interest to the Fed, given the US dollar’s role as a reserve currency.
“It would be great to see that there’s recognition … that the Fed is valuable to the American people. It’s very valuable to the entire world,” he said.
Trump also tried to fire another Fed official, Governor Lisa Cook, who challenged her dismissal in a case that will be heard before the Supreme Court next week.
