Global Central Banks Coordinate Solidarity Statement for Fed Chair Powell Amid Criminal Investigation

This analysis examines the unprecedented coordinated response from global central banks following the Trump administration’s criminal investigation into Federal Reserve Chair Jerome Powell. The investigation, which centers on Powell’s congressional testimony regarding a $2.5 billion renovation of the Federal Reserve headquarters, has triggered bipartisan condemnation and raised fundamental questions about the independence of the United States’ central banking system. Under the coordination of the Bank for International Settlements (BIS), central banks worldwide are working to issue a joint statement expressing solidarity with Powell, signaling the severity with which international monetary authorities view this development [1][2].

The criminal investigation into Fed Chair Powell represents a watershed moment in the relationship between the executive branch and the Federal Reserve, an institution that has operated with substantial independence since its founding in 1913. According to reports, the Department of Justice issued grand jury subpoenas on Friday, January 9, 2026, targeting testimony Powell provided to Congress concerning the extensive renovation of the Federal Reserve’s headquarters building in Washington, D.C. [1][2]. The investigation was approved by U.S. Attorney Jeanine Pirro, a Trump appointee, in November 2025, according to the New York Times [5].

Chair Powell has publicly characterized the investigation as a “pretext” designed to exert pressure on monetary policy decisions, specifically regarding interest rates [2][3]. This assertion strikes at the heart of a doctrine that has been foundational to U.S. financial credibility: the principle that central bank decisions should be free from political interference to maintain stable inflation expectations and investor confidence. The timing of the investigation, occurring as the Federal Reserve navigates a complex economic landscape with ongoing inflation concerns and evolving fiscal policy under the new administration, adds additional layers of complexity to the situation.

The response from global central banks has been swift and historically unprecedented in its scope. Reports indicate that monetary authorities across multiple jurisdictions are working through the Bank for International Settlements—often described as the central bank for central banks—to craft a joint solidarity statement that would be open for signing by institutions worldwide [1][2]. This coordinated approach underscores the perceived systemic risk that this investigation poses to the architecture of global finance.

The decision to mobilize under the BIS umbrella reflects recognition among international monetary authorities that challenges to central bank independence in major economies carry implications that extend far beyond any single jurisdiction. The Federal Reserve’s decisions on interest rates and monetary policy have global ramifications, affecting capital flows, exchange rates, and economic conditions from Frankfurt to Tokyo. A precedent in which a sitting central bank chair faces criminal investigation for testimony provided in the course of their official duties could fundamentally alter the calculus of independence that undergirds the international financial system.

The investigation has generated unusually forceful opposition from across the political spectrum. Most significantly, all three living former Federal Reserve chairs—Janet Yellen, Ben Bernanke, and Alan Greenspan—have publicly condemned the investigation in stark terms [3]. Their joint statement, described as decrying an “unprecedented assault” on central bank independence, carries particular weight given the collective decades of experience these individuals bring to questions of monetary policy governance. Former Chair Yellen, who currently serves as Treasury Secretary, has both institutional knowledge and a direct stake in defending the independence of the institution she once led.

The former chairs’ characterization of the investigation as resembling “monetary policy in emerging markets with weak institutions” represents a particularly pointed critique [3]. This comparison to developing economies where central bank independence is often compromised sends a clear signal about how veteran monetary policymakers view the current trajectory. The concern is not merely about one investigation or one chair, but about the precedent being established for the relationship between political authorities and technocratic monetary management.

Congressional Republicans have also registered objections, with reports indicating that Senators Lisa Murkowski and Thom Tillis have blocked Federal Reserve nominees in response to the investigation [2]. This bipartisan pushback suggests that concerns about the investigation extend beyond partisan objections to the Trump administration, reflecting deeper institutional anxieties about the separation of monetary policy from political pressure.

The Federal Reserve’s independence has evolved over more than a century as a carefully constructed safeguard against the temptation for governments to exploit monetary policy for short-term political advantage. The current investigation threatens to undermine this institutional framework at a moment when global financial markets are already grappling with significant uncertainty. The response from international central banks suggests recognition that what happens to the Fed has implications for every central bank that operates under similar independence doctrines [1][2].

The BIS-coordinated solidarity statement represents an extraordinary moment in central banking history. While central banks have occasionally issued joint statements on matters of shared concern—particularly during periods of financial crisis—the mobilization of a global response to defend one individual chair’s independence signals the depth of concern within the central banking community. This is not merely about supporting Powell as an individual, but about affirming the institutional principle that central bankers must be able to speak and decide without fear of political retribution.

Adding complexity to the situation, the Federal Reserve faces simultaneous challenges on multiple fronts beyond the criminal investigation into Powell. Governor Lisa Cook is facing a removal effort that will be heard by the Supreme Court on January 21, 2026 [5]. The combination of a criminal investigation targeting the Chair and a removal proceeding against a Governor creates an unprecedented governance crisis for the institution. These parallel pressures suggest a coordinated strategy to reshape the Federal Reserve’s leadership and potentially its policy direction, though the scope and intentionality of any such strategy remains subject to interpretation.

The timing of the Supreme Court hearing, coming just days after the criminal investigation became public, adds urgency to an already tense situation. Depending on the Court’s ruling, the administration could gain additional leverage over Fed policy decisions even as the criminal investigation into Powell continues. Market participants will be closely monitoring both developments for implications about the future trajectory of U.S. monetary policy.

Market data from January 12, 2026, prior to the full emergence of news about the investigation, showed modest gains across major indices: the S&P 500 advanced 0.48%, the NASDAQ added 0.67%, the Dow Jones rose 0.18%, and the Russell 2000 gained 0.83% [0]. However, these figures likely represent trading before the news fully broke or reflect volatility as investors processed evolving information. Deutsche Welle reported that stocks and the U.S. dollar fell while gold rose as investors digested the implications of the developing situation [4].

The reaction in gold—a traditional safe-haven asset—provides particular insight into investor psychology. Rising gold prices suggest that at least some market participants view the situation as introducing elevated risk into the financial system. Similarly, dollar weakness could reflect concerns about the long-term credibility of U.S. monetary policy independence. These market signals warrant monitoring as the situation evolves, as they may provide early indicators of how investors are pricing in the institutional risks associated with the investigation.

The investigation’s focus on congressional testimony raises significant constitutional questions about the interplay between executive branch prosecutorial authority and the speech or debate protections that cover lawmakers and their interactions with executive branch witnesses. Powell’s testimony before Congress, made in his official capacity as Fed Chair, would typically be shielded from criminal liability under principles designed to preserve the independence of governmental branches and ensure candid communication between them.

The decision to pursue a criminal investigation in this context, rather than relying on existing oversight mechanisms for federal officials, suggests an aggressive legal strategy that may face substantial procedural and constitutional hurdles. The outcome of any legal proceedings could have lasting implications for the boundaries of executive power and the protections afforded to officials who testify before Congress in their official capacities.

The investigation presents several interconnected risks that warrant careful attention. First, the precedent risk must be considered: even if Powell is ultimately cleared of any wrongdoing, the mere existence of a criminal probe against a sitting Federal Reserve chair could permanently alter the environment in which future central bank decisions are made. The chilling effect on candor and independent decision-making could manifest even absent a conviction, as subsequent chairs may be more hesitant to take positions that could generate political friction.

Second, the dollar’s reserve currency status represents a systemic concern. The U.S. dollar’s role as the primary reserve currency for global finance is predicated partly on perceptions of institutional stability and policy predictability. Challenges to central bank independence could, over time, influence decisions by foreign central banks and sovereign wealth funds regarding their dollar allocations. While such shifts would likely occur gradually, the trajectory warrants monitoring.

Third, the investigation introduces policy uncertainty that could affect inflation expectations and market functioning. The Federal Reserve’s credibility in maintaining its 2% inflation target depends on perceptions of its commitment to price stability independent of political pressure. Any erosion of this credibility could manifest in higher long-term inflation expectations, complicating the Fed’s task and potentially requiring more aggressive policy responses in the future.

Fourth, the dual pressure points—criminal investigation and the Cook Supreme Court case—create governance uncertainty that could impair the Federal Reserve’s ability to function effectively. A central bank facing leadership challenges on multiple fronts may find its institutional capacity diminished at a moment when decisive monetary policy action may be necessary.

Despite the predominantly negative implications, the situation also presents certain opportunities. The forceful response from former Fed chairs and the BIS-coordinated international statement create an opportunity to reaffirm and strengthen norms around central bank independence. If the investigation is resolved in a manner that upholds these principles, it could ultimately reinforce the institutional framework rather than weaken it.

The bipartisan congressional opposition presents an opportunity for institutional guardrails to function as designed. The blocking of Fed nominees by Republican senators demonstrates that concerns about central bank independence can transcend partisan divisions, suggesting that there may be legislative appetite for measures to further codify and protect central bank independence.

Finally, the situation creates an opportunity for enhanced public understanding of the importance of central bank independence. The widespread coverage of the investigation has brought these technical institutional questions into broader public discourse, potentially building support for strong independence protections that might otherwise be taken for granted.

The next 24 to 72 hours represent a particularly sensitive period. The release of the BIS solidarity statement and the content of that statement will provide important signals about the international community’s level of concern and potentially influence market reactions. Congressional hearings and statements expected in the coming days will clarify the domestic political trajectory. The market opening on January 13 will reveal how investors are pricing the evolving situation, with particular attention to currency and Treasury market reactions.

Looking ahead to January 21, the Supreme Court hearing on the Cook removal case represents another inflection point that could clarify the legal boundaries of the administration’s authority over the Federal Reserve. Developments in the grand jury investigation itself—particularly any indication of the scope and timeline of proceedings—will continue to drive sentiment and policy uncertainty.

The Trump administration’s criminal investigation into Federal Reserve Chair Jerome Powell, announced in early January 2026, concerns Powell’s congressional testimony about a $2.5 billion renovation of the Fed headquarters. Powell has characterized the investigation as a “pretext” designed to pressure interest rate decisions, raising fundamental questions about central bank independence. The Department of Justice approved the investigation through U.S. Attorney Jeanine Pirro in November 2025, with grand jury subpoenas issued on January 9, 2026 [1][2][5].

Global central banks are coordinating a solidarity statement through the Bank for International Settlements, with the statement expected on January 13, 2026. This unprecedented international response signals the severity with which monetary authorities view the investigation’s implications for the global financial architecture [1][2]. All three living former Fed chairs—Janet Yellen, Ben Bernanke, and Alan Greenspan—have condemned the investigation as an “unprecedented assault” on central bank independence, with Greenspan comparing the situation to monetary policy in emerging markets with weak institutions [3].

Market reaction has shown concern, with stocks and the dollar weakening while gold rose as investors assessed the implications [4]. Congressional Republicans have blocked Fed nominees in opposition, and simultaneous legal pressures including Governor Lisa Cook’s Supreme Court hearing on January 21 create an unprecedented governance crisis for the Federal Reserve [2][5]. The situation remains fluid, with developments expected in the coming days regarding the BIS statement, congressional responses, and market reactions to ongoing revelations.