Rallying to Powell’s Side Is Self-Interest
Global central banks need the Fed at least as much as Powell needs them.
Photo: Natalie Behring/Getty Images
The global monetary chiefs who flocked to the defense of Federal Reserve Chair Jerome Powell, under siege from the White House, were no doubt sincere in their desire for central bank independence. But that fellowship — from Frankfurt to Seoul — was also acting out of self-interest.
Twice this century, Fed officials wrapped their arms around the world economy. Transcripts of Federal Open Market Committee meetings from 2020, released last week, show an institution acutely aware of its responsibilities as the pandemic broke out — and of how dependent the US economy and financial system have become on developments abroad. As the 2008 collapse also showed, policy doesn't end at the water’s edge in times of crisis.