Global central banks back Fed Chair Powell, warn political pressure risks market volatility
Eleven major central banks and senior officials from the Bank for International Settlements issued a joint statement expressing full solidarity with US Federal Reserve Chair Jerome H. Powell and underscoring the importance of central bank independence. The public backing follows a US criminal probe into Powell related to a $2.5 billion Fed headquarters renovation and rising political pressure from the Trump administration, which has suggested potential replacements who favor rate cuts. Signatories included ECB President Christine Lagarde, Bank of England Governor Andrew Bailey, Bank of Canada Governor Tiff Macklem, and central bank leaders from Sweden, Denmark, Switzerland, Norway, Australia, South Korea and Brazil. Crypto-market commentators said the dispute could increase short-term volatility: weakening confidence in dollar policy may push flows toward safe havens such as Bitcoin and gold, while political shocks can trigger sell-offs and risk-off moves during US trading hours. Market participants noted a softer dollar and rising gold/silver; some analysts expect that eventual rate cuts could boost liquidity and support crypto prices longer term. Key implications for traders: monitor FX and gold moves, expect higher intraday volatility around US sessions, and watch rate-policy political developments for directional signals to risk assets including BTC.
Neutral
The joint backing of Powell by major central banks is a stabilizing signal for global financial governance, which tempers extreme market disruption. However, the political probe and potential Fed personnel changes introduce genuine policy uncertainty. For crypto markets this creates mixed effects: in the short term, political shocks and reduced confidence in dollar policy typically raise volatility and can prompt risk-off moves, causing intraday selling pressure—especially during US trading hours. Conversely, a weakening dollar or expectations of future rate cuts (if political influence leads to looser policy) can shift flows into inflation hedges and risk assets, benefiting Bitcoin and gold over the medium term. Historical parallels: political interference or questions about central bank independence (e.g., past episodes in emerging markets) often produced immediate market stress followed by regime-dependent recoveries once central bank credibility was restored. Traders should therefore expect heightened short-term volatility (manage position sizes, use tighter risk controls, watch US session volume) while monitoring policy signals for a potential bullish macro rotation if rate cuts become expected. Key indicators to watch: USD index, gold/silver prices, BTC correlation with equities, Fed communications, and any legal developments related to the investigation.