Trump-Powell conflict has gone global as central bank heads come to Fed Chair’s defence
Bernie Fraser, former Governor of the Reserve Bank of Australia (RBA), has made it crystal clear what he thinks of US President Donald Trump’s interventions into the operations of the supposedly independent US Federal Reserve.
He’s an “f … ing idiot”, Fraser said in comments published in The Australian.
“I’d just join in the chorus of ‘what a f … ing idiot that guy in the US is. This is just another illustration, I’m afraid,” Fraser continued.
Fraser stressed the importance of independence from political interference to the workings of a central bank.
“(Trump) has been talking about doing something like this from his first term and he just wants to control everything, including the interest rates.
“But central banks themselves know that their independence is absolutely critical to good performance and for their credibility with the public. Once you start fooling around and threatening that credibility then you are in trouble.”
What the F is going on?
Trump has gone to war against Federal Reserve Chair Jerome Powell due to the latter’s stubbornness against lowering interest rates.
Trump wants much lower rates to stimulate growth and markets, but Powell has resisted cutting as fast or as far as Trump wants.
While the Fed implemented three rate cuts in 2025 – bringing the cash rate down from 4.5% to 3.75% – it has not been enough to keep Trump’s onslaught at bay.
The US President has called Powell “a bad Fed person” who “has done a bad job” and is “either incompetent or crooked”.
“That jerk will be gone soon,” warned Trump during a speech at the Detroit Economic Club in Michigan earlier this week.
The Justice Department under Trump has also threatened legal action against the Federal Reserve in relation to his testimony before the Senate in 2025 regarding renovations to the central bank’s office building.
While Trump has denied that this legal action has anything to do with his desire to see Powell removed from his position, Powell has called the legal threats “a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President”.
Bullock gets backing
Current RBA Governor Michelle Bullock is one of nine central bank heads to have come out in solidarity with Powell.
In a statement signed by nine central bankers, including Bullock, European Central Bank President Chrisine Lagarde, and Anna Breman, Governor of the Reserve Bank of New Zealand, they said Powell “has served with integrity, focused on his mandate and an unwavering commitment to the public interest”.
Breman’s signing of the statement was harshly criticised by New Zealand Foreign Minister Winston Peters on, who rebuked Breman for putting her name to the statement.
Peters told Breman to “stay in her New Zealand lane and stick to domestic monetary policy”.
But Bullock has yet to receive political backlash for backing Powell. Her immediate predecessor Philip Lowe has given her his “100 per cent” backing.
“I would have been proud to put my signature to it,” Lowe added.
