The threat to the independence of the US Federal Reserve is adding to global economic uncertainty, Bank of Canada Governor Tiff Macklem said Wednesday, in his strongest remarks so far on the issue.
US President Donald Trump has repeatedly attacked Fed Chair Jerome Powell and called for interest rate cuts. He is also seeking the removal of Fed Governor Lisa Cook, while the Department of Justice has threatened Powell with a criminal indictment.
Macklem spoke after the Bank of Canada held interest rates steady, citing unusually high uncertainty.
“I think the threat to the independence of the central bank in the United States is contributing to that uncertainty,” he said. “The Federal Reserve is the most important central bank in the world, and we all need it to function well.”
He said any loss of Fed independence would have global consequences, with Canada especially exposed because of its close economic ties to the US.
Earlier this month, Macklem joined other central bank leaders in a joint statement supporting Powell. Last September, he warned that Trump’s pressure on the Fed was beginning to affect financial markets.
Macklem said central bank independence allows officials to make difficult decisions in the public interest.
“He is doing a good job leading the Fed based on evidence and facts,” Macklem said of Powell. “I hope it stays that way. That’s important for everyone.”
Bank of Canada Senior Deputy Governor Carolyn Rogers said a strong, independent Fed benefits nearly every economy by supporting stable markets and controlling inflation.
“That stability brings predictability and less volatility in interest rates,” she said. “There are many reasons why an independent Fed matters.”
