John Williams, President of the New York Fed, defended Jerome Powell. Speaking at the Council on Foreign Relations in New York, Williams said Powell represents public service within the Federal Reserve’s 13 year leadership structure and praised his record of calmly steering the Federal Reserve through periods of high uncertainty.
Williams added that Powell has proven himself to be a man of impeccable integrity.
Ahead of the Fed’s first policy meeting of 2026, scheduled for later this month, Williams said interest rates have reached a comfortable place. This suggests policymakers may not be in a rush to cut rates again following three consecutive rate cuts that closed out 2025.
He noted that monetary policy is now well positioned and that the need for further rate reductions in the near term has diminished.
German Chancellor Merz warns of political influence
German Chancellor Friedrich Merz said on Tuesday that he was increasingly concerned about the growing political influence over central banks worldwide and stressed that allowing them to operate independently is vital.
Speaking during a visit to the Indian city of Bengaluru, Merz said:
“I have been concerned for some time not just over the past few days or weeks about how strong political influence over central banks around the world has become. For good reasons, in Europe, including Germany, we have always regarded central bank independence as extremely important. I hope this remains the case.”
Merz emphasized that central banks’ ability to make monetary policy decisions free from political interference is critical for economic stability.
What happened?
An unprecedented crisis in the history of the Federal Reserve came into public view on Sunday night, when Powell announced that he had received a subpoena from the U.S. Department of Justice.
The subpoenas relate to Powell’s testimony before the Senate over the summer and to his defense of the Fed’s long running headquarters renovation project, which Donald Trump and his allies have criticized as costly and poorly managed.
In a strongly worded statement on Sunday night, Powell said the investigation was part of an effort by Trump to influence how the Federal Reserve sets interest rates.
