Foreign central bankers back Fed Chair Powell during DOJ controversy

The controversy around Federal Reserve Chair Jerome Powell has gone global.

Nearly a dozen foreign central bankers issued a statement Tuesday in support of Mr. Powell as he faces a criminal inquiry into testimony he provided to Congress about an over-budget renovation project.

“The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve. It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability,” the foreign bankers said. “Chair Powell has served with integrity, focused on his mandate and an unwavering commitment to the public interest.”

European Central Bank President Christine Lagarde and bankers from Europe, Australia, Brazil, Canada and South Korea signed the letter supporting Mr. Powell.

The White House says President Trump did not order the Department of Justice to send a grand jury subpoena to the Fed. 

The inquiry hinges on whether Mr. Powell lied to Congress about a Fed building renovation in Washington, though the Justice Department has not elaborated.

Mr. Trump has pilloried Mr. Powell for months over interest rates, raising bipartisan doubts about the inquiry.

"That jerk will be gone soon," the president said Tuesday.

Former Fed chairs rallied to Mr. Powell’s defense, and congressional Republicans who’ve known him for a long time say it is hard to view him as a criminal.

Sen. John N. Kennedy, Louisiana Republican, said he’s known Mr. Powell for a while and would be “stunned” to find out he’d done anything wrong. He said the administration seemed to be suggesting Mr. Powell had perjured himself.

“That is a serious allegation. It is as serious as four heart attacks and a stroke. Someone making an allegation like that needs to be able to offer evidence,” he said.

Mr. Kennedy said the probe might backfire on the administration.

“If you want to make interest rates go up instead of go down, I can't think of a better way than to have the Federal Reserve get into a pissing contest with the executive branch of government.”

Rep. French Hill, Arkansas Republican, said he’s known Mr. Powell since the George H.W. Bush administration and he is a “man of integrity.”

“Pursuing criminal charges relating to his testimony on building renovations at a time when the nation’s economy requires focus creates an unnecessary distraction,” Mr. Hill said. “The Federal Reserve is led by strong, capable individuals appointed by President Trump, and this action could undermine this and future Administrations' ability to make sound monetary policy decisions.”

Mr. Trump repeated his criticism of Mr. Powell on Tuesday, pointing to cost overruns at the Fed projects.

“So, he either is incompetent, or he is crooked,” Mr. Trump said. “I don't know what he is, but he certainly doesn't do a very good job.”

Mr. Powell’s term ends in May, so the president is looking to appoint a successor who will be more aggressive in cutting rates.

Mr. Trump said the Fed often likes to “kill every rally” in the stock market because they are “so petrified” of inflation.

"You can have growth and very low inflation,” Mr. Trump said at the Detroit Economic Club. “In fact, oftentimes, growth is good for low inflation."