IMF Head Defends Powell Amid Trump Pressure
Henry ThompsonIMF chief Kristalina Georgieva defends Federal Reserve independence and Chair Powell amidst a Trump administration probe.
International Monetary Fund (IMF) chief Kristalina Georgieva has publicly defended the principle of central bank independence and offered her support for Federal Reserve Chair Jerome Powell, who is currently facing an investigation by the Trump administration.
Figure 1: IMF Managing Director Kristalina Georgieva has voiced strong support for the Federal Reserve's independence amid political pressure.
In a Thursday interview with Reuters, Georgieva stressed that substantial evidence shows independent central banks serve the best interests of both businesses and households. She argued that evidence-based, data-driven decision-making is fundamentally good for the economy.
Voicing her personal respect for the Fed Chair, the IMF managing director stated, "I have worked with Jay Powell. He is a very good professional, a very decent man, and I think that his standing among his colleagues tells the story." Her comments align with a letter of support for Powell signed by her predecessor, European Central Bank head Christine Lagarde, and other major central bank leaders.
The Investigation into the Fed Chair
The show of support comes after Powell revealed on Sunday that the Trump administration has launched an investigation into him. The probe focuses on cost overruns related to a $2.5 billion project to renovate two historic buildings at the Fed's Washington headquarters.
Powell has denied any wrongdoing, describing the administration's actions as a pretext to pressure him for not yielding to President Trump's repeated demands for significantly lower interest rates.
This unprecedented move against a sitting Fed Chair has triggered widespread criticism from several key Republican senators, foreign economic officials, investors, and former U.S. government officials from both political parties.
Trump's Stance on Fed Independence
President Trump has frequently criticized Powell's leadership at the Federal Reserve, often launching personal attacks over the pace of interest rate cuts.
On Wednesday, Trump dismissed concerns that eroding the central bank's independence could weaken the U.S. dollar and fuel inflation. When asked about these risks by Reuters, he replied, "I don't care."
The pressure extends beyond Powell. Trump has also sought to fire another Fed official, Governor Lisa Cook, who is challenging her termination in a legal case scheduled to be heard by the Supreme Court next week.
Global Implications for Monetary Stability
Georgieva noted that the IMF closely monitors issues like monetary and financial stability, as well as the institutional strength of member countries. The Federal Reserve receives special attention given the U.S. dollar's crucial role as a global reserve currency.
"It would be very good to see that there is a recognition ... that the Fed is precious for the Americans," she said. "It is very important for the rest of the world."
