European Central Bank President Christine Lagarde reaffirmed her support for Jerome Powell on Monday as the US Federal Reserve Chair remains under investigation by the Justice Department.
Mr Powell revealed he was under criminal investigation last month over remarks he made to a US congressional committee on the Fed's headquarters renovation project. He maintains the inquiry is a cover-up to pressure him into lowering interest rates.
Support flowed in for the under-pressure Fed chief, including from former Fed and Treasury officials and politicians.
Ms Lagarde joined other global central bankers in expressing their solidarity with Mr Powell, saying that central bank independence is a cornerstone for financial and economic stability.
“I certainly have enough respect and esteem for him and his work to come in solidarity with him when it was difficult,” she told a conference.
Ms Lagarde received the Paul A Volcker Award, a lifetime achievement honour given by the NABE Conference in honour of the towering Fed chairman who led the central bank's ruthless campaign to vanquish inflation in the 1970s and '80s.
“His act of personal conviction changed the trajectory of central banking not only in the United States, but worldwide. It is the same tradition that Jay Powell has upheld with such resolve,” Ms Lagarde said while accepting the award.
US President Donald Trump has relentlessly pressured the Fed since returning to office last year for not issuing steeper rate cuts. Mr Powell, referred to by Mr Trump as a “numskull” and “stupid person”, has frequently been at the centre of those attacks. The President, however, has said he was unaware of the Justice Department's investigation.
Ms Lagarde said it is unlikely that central banks would be capable of controlling inflation without their independence being protected. Economists have long argued that is because they do not seek short-term gains for political purposes.
Mr Powell told reporters last month that he remained confident in the world's most significant central bank's independence despite the legal battles surrounding it.
He also voiced support for Fed governor Lisa Cook, who Mr Trump tried to oust from the board of governors last summer over mortgage fraud allegations. Ms Cook has not been charged with a crime and has denied the allegations.
Mr Powell attended arguments over the legal case at the Supreme Court last month, where the nation's top nine judges are considering if Mr Trump has the authority to remove a Fed governor from the board. No other president has ever tried to fire a Fed official.
“That case is perhaps the most important legal case in the Fed's 113-year history,” Mr Powell said.
The investigation into Mr Powell also complicates the nomination process for former Fed governor Kevin Warsh, Mr Trump's pick to succeed Mr Powell when his term ends in May. Republican Senator Thom Tillis, who is on the committee charged with vetting the President's Fed nominations, vowed to block all nominees until the legal matter is resolved.
Asked what her advice would be to Mr Warsh if he takes over the Federal Reserve, Ms Lagarde said: “To do his job."
