International Monetary Fund (IMF) Managing Director Kristalina Georgieva on Thursday stressed the importance of central bank independence and threw her support behind beleaguered U.S. Federal Reserve (Fed) Chair Jerome Powell, who is facing a Trump administration investigation for renovation cost overruns.
Powell on Sunday disclosed that the Trump administration had opened an investigation into him over cost overruns for a $2.5 billion project to renovate two historical buildings at the Fed's Washington headquarters complex.
Powell denies wrongdoing and has called the unprecedented actions a pretext to put pressure on him for not bowing to President Donald Trump's long-running demands for sharply lower interest rates.
Georgieva told Reuters in an interview that there was ample evidence that central bank independence worked in the interest of businesses and households, and that evidence-based, data-based decision-making is good for the economy.
She said she had worked with Powell and respected his professionalism.
"I have worked with Jay Powell. He is a very good professional, very decent man, and I think that his standing among his colleagues tells the story," she said, when asked about a letter of support signed by her predecessor, Christine Lagarde, now head of the European Central Bank (ECB), and other large central banks.
The probe has sparked widespread criticism from some key members of Trump's Republican Party in the U.S. Senate, which must confirm his nominee to succeed Powell, along with foreign economic officials, investors and former U.S. government officials from both political parties.
Trump has repeatedly derided Powell's leadership of the Fed and attacked him, often personally, over what he sees as the Fed chair's slow moves to cut interest rates. On Wednesday, he dismissed concerns that eroding central bank independence would undermine the value of the U.S. dollar and spark inflation, telling Reuters, "I don't care."
Georgieva said the IMF looked carefully at issues such as monetary and financial stability, as well as the strength of a country's institutions. It was specifically interested in the Fed, given the role of the U.S. dollar as a reserve currency.
"It would be very good to see that there is a recognition ... that the Fed is precious for the Americans. It is very important for the rest of the world," she said.
Trump has also attempted to fire another Fed official, Governor Lisa Cook, who has challenged her termination in a legal case that will be argued before the Supreme Court next week.
