The heads of many of the world’s major central banks issued a strong joint statement on Tuesday defending Federal Reserve Chair Jerome Powell’s independence after the U.S. administration’s investigation into his actions triggered market concern. Central bank chiefs, including leaders from the European Central Bank, Bank of England and Bank of Canada, affirmed Powell’s integrity and stressed that independent monetary policy is vital for price and financial stability worldwide.
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European financial leaders emphasised that monetary authorities must operate free from political interference to ensure effective inflation targeting and support long-term growth. The coordinated response aims to reassure markets that fiscal and monetary roles remain separate in major economies. Investors noted that such statements can help stabilise bond and currency markets in times of heightened political risk.

The joint message also underscored the challenges central banks face as they navigate complex macroeconomic landscapes, including inflation pressures, labour market dynamics and shifting capital flows. Market participants said maintaining central bank independence is critical for coherent global policy responses.

In currency markets, the debate over Fed autonomy contributed to volatility in the U.S. dollar, with some major currencies strengthening amid safe-haven demand and risk repositioning. Bond yields showed modest movement as traders weighed policy credibility against economic data points due later in the week.

Observers say the coordinated defence of central bank governance sends a broader signal to investors that monetary leaders remain committed to established frameworks, even in the face of political scrutiny, a factor that could shape market sentiment going into 2026.

Source: Reuters