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The independence of central banks, which allows policymakers to operate free from political meddling, is considered sacrosanct by investors and economists.
By Eshe Nelson
Reporting from London
July 17, 2025, 11:07 a.m. ET
Christine Lagarde, the president of the European Central Bank, at a recent conference described Jerome H. Powell, the chair of the Federal Reserve, as “the
standard of the courageous central banker.”
The room was filled with central bank officials from around the world, who stood
to applaud in a public outburst of support for a fellow central banker under relentless assault by President Trump.
Central banks’ independence, which allows policymakers to set interest rates free from political interference, is considered sacrosanct by investors and economists. That’s why the attacks on the Fed, the most important and influential central bank in the world, have reverberated far beyond Washington.
“It’s a signal which is worrisome,” said Stefan Ingves, the former governor of
the Riksbank, Sweden’s central bank.
Turmoil in U.S. financial markets risks upending the finances of countries and companies abroad. The yields on long-term U.S. government debt, which serve as benchmarks for interest rates around the world, could spike if Mr. Trump were to
fire Mr. Powell, economists warn. The value of the dollar could sink.
Many central banks hold a large share of their reserves in dollars and dollar-denominated assets. The dollar is also the dominant form of global payment, on one side of nearly 90 percent of all cross-border transactions, according to the Bank for International Settlements, the bank for central banks.
“Given that the U.S. dollar is so dominant in the global economy, and it’s a
reserve currency, supplying a stable U.S. dollar is a global public good,” Mr.
Ingves said. “That’s why what is going on in the U.S. matters to the rest of the
world.”
https://www.nytimes.com/2025/07/17/business/trump-powell-fed-global-reaction.html
Trump doesn't care about the state of the economy, and never did.
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