Bank of Canada Governor Tiff Macklem stood by Federal Reserve Chair Jerome Powell amidst the recent news of a criminal investigation initiated by U.S. President Donald Trump’s Justice Department. Powell disclosed that the Fed was subpoenaed by the U.S. DOJ in connection with his Senate testimony regarding a renovation project for Federal Reserve buildings in Washington, D.C.
Powell alleged that the potential criminal indictment was a retaliatory measure for independent monetary policymakers’ refusal to comply with Trump’s demands for interest rate cuts. Macklem, who had previously voiced support for Powell amid mounting pressure from the Trump administration, reiterated his backing for Powell in a statement on Monday, praising him as a dedicated public servant and affirming his full support.
In a media statement, Macklem commended Powell for steering the Fed through challenging times and making monetary policy decisions based on evidence rather than political influence. Both the Bank of Canada and the U.S. Fed operate independently from government influence, with the goal of maintaining annual inflation at two percent. Additionally, the Fed aims to promote maximum employment in the U.S. economy.
Trump has criticized Powell for not swiftly reducing interest rates as desired. Macklem emphasized the significance of central bank independence in ensuring price stability and enabling policymakers to make decisions that benefit the economy without political interference.
A group of former Fed chairs and economists likened the actions of the Trump administration to those seen in developing countries. Financial markets did not anticipate interest rate cuts from either the Bank of Canada or the U.S. Fed in their upcoming decisions at the end of January. Analysts suggested that the market’s subdued reaction indicated confidence in Powell’s ability to refute allegations related to the Fed’s renovation project.
Trump has a history of leveraging investigations to target his political adversaries, including Fed governor Lisa Cook, New York Attorney General Letitia James, and former FBI director James Comey. White House press secretary Karoline Leavitt clarified that Trump did not direct the Justice Department to probe Powell, stating that the determination of Powell’s alleged criminal conduct lies with the DOJ.