Recently, a wave of controversy over central bank independence has swept through the global financial community. Central bank governors from multiple countries have unusually joined forces to speak out in support of Federal Reserve Chair Jerome Powell, collectively responding to pressure from the U.S. administration. Such a high-level joint statement is typically only issued during a global financial crisis; this time, it was released to uphold the authority of a central bank leader, reflecting deep market concerns.

How important is central bank independence? The Governor of the Bank of Canada bluntly stated that Powell "embodies the highest standards of public service," and that he makes policy decisions based on data and facts rather than following the President's directives. Leaders of the European Central Bank and the German Bundesbank also emphasized that independence is a prerequisite for price stability and healthy economic operation.

So, how did this controversy arise? The U.S. Department of Justice issued a grand jury subpoena to the Federal Reserve and even threatened to bring criminal charges against Powell. The superficial reason was an investigation related to congressional testimony, but Powell is well aware—this is essentially an attempt by the administration to exert legal pressure, forcing the Fed to compromise on interest rate policies. Powell explicitly stated that the Fed sets interest rates based on public interest, not to please any individual. Such use of criminal threats to interfere with central bank decision-making is rare among developed economies, and it's no wonder that global central banks have collectively spoken out.