Global financial institutions took the unusual step of closing ranks on Monday, issuing a coordinated defence of the US Federal Reserve’s independence amid deepening tension between President Trump and Fed chair Jerome Powell. The joint statement — signed by the heads of the Bank of England, the European Central Bank and others — warned that “political intimidation has no place in monetary policy.” It was an extraordinary rebuke from some of the world’s most powerful central bankers, underscoring the seriousness of the confrontation.
The statement followed reports that the US Justice Department may bring charges against Powell, a move that market participants viewed as an overt attempt to influence monetary policy. Investors quickly shifted into defensive mode: gold surged to record highs, the dollar weakened, and Treasury yields dipped as traders sought safety. Several major Wall Street figures, including JPMorgan’s Jamie Dimon, publicly warned that political pressure on the Fed could undermine global trust in US financial institutions.
Despite the political turmoil, equity markets have so far proved resilient. The Dow Jones and S&P 500 both closed at record highs, highlighting investor confidence in corporate earnings and underlying economic strength. Still, analysts caution that sentiment could change quickly if the clash in Washington escalates or if today’s inflation figures surprise to the upside. The data are expected to confirm steady price growth — but in the current climate, even a modest deviation could spark outsized moves.
In London, officials avoided direct comment but privately acknowledged the “sensitivity” of market reaction to events in the US. With UK and European data mixed and global institutions under strain, traders are preparing for another potentially volatile session as central-bank credibility — the cornerstone of modern monetary systems — takes centre stage.
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