Wall Street CEOs back Fed independence as Trump admin probes Powell

CEOs from top Wall Street banks JPMorgan Chase and BNY voiced support for the independence of the US Federal Reserve on Tuesday, days after the Trump administration opened a criminal investigation into Fed Chair Jerome Powell.

The administration's investigation into Powell drew condemnation from former Fed chiefs and criticism from key members of the Republican Party this week.

It has also resulted in an unprecedented joint statement from several countries' central banks expressing their support for their US counterpart.

"Everyone we know believes in Fed independence," JPMorgan CEO Jamie Dimon told reporters on a conference call. "This is probably not a great idea and in my view, it will have the reverse consequences of raising inflation expectations and probably increase rates over time."

Dimon, one of the most influential figures in corporate America, said Fed independence was "absolutely critical" last year.

BNY CEO Robin Vince also warned of negative consequences of eroding Fed independence on Tuesday.

"Independent central banks with the ability to independently set monetary policy in the long term interests of the nation is a pretty well established thing that we've seen all around the world over a very long period of time," Vince told reporters on a call.

"Let's not shake the foundation of the bond market and potentially do something that could cause interest rates to actually get pushed up because somehow there's lack of confidence in the Fed's independence," Vince said.

Powell revealed late on Sunday the Fed had received subpoenas from the US Justice Department, which he called a "pretext" to win presidential influence over interest rates. The US administration's criminal probe is formally about the renovation of the Fed's headquarters.

Central bankers worry that political influence over the Fed would undermine confidence in the bank's commitment to its inflation target, risk higher inflation and fuel volatility in global financial markets.

"Loss of Fed independence tends to lead to steeper yield curves and other damage to ongoing economic dynamism," JPMorgan's finance chief, Jeremy Barnum, said on a call with reporters. "The larger question is damage to American economic prospects and, frankly, global economic stability."

Trump has demanded the Fed slash rates since resuming office in 2025, blaming its policies for holding back the economy and publicly musing about firing Powell, despite legal protections that ostensibly shield the Fed chair from removal.

While Powell's term as chair ends in May, he has the right to remain on the Fed board until January 31, 2028, denying the president another Fed appointment that would otherwise be Trump's fourth on the seven-member board until near the end of his term. — Reuters