IMF Chief Georgieva Supports Central Bank Independence, Backs Powell

• Powell is under investigation for cost overruns on a $2.5 billion Fed headquarters renovation project, which he calls a pretext for pressure to lower interest rates in response to Trump's demands
• Georgieva emphasized that central bank independence is 'precious for Americans' and 'very important for the rest of the world' given the dollar's role as a reserve currency
• Trump stated he doesn't care about warnings that eroding Fed independence would undermine the dollar and cause inflation, while also attempting to fire Fed Governor Lisa Cook in a case heading to the Supreme Court

Summary: IMF Chief Supports Central Bank Independence Amid Powell Investigation

Key Developments:

IMF Managing Director Kristalina Georgieva publicly backed Federal Reserve Chair Jerome Powell on January 15, 2026, emphasizing the critical importance of central bank independence. Her support comes as Powell faces a Trump administration investigation over cost overruns on a $2.5 billion renovation project at the Fed's Washington headquarters.

Main Points:

Powell disclosed the investigation on Sunday and denies any wrongdoing, characterizing it as a pretext for political pressure to lower interest rates. He has received support from Senate Republicans, foreign economic officials, investors, and former U.S. government officials from both parties. Former IMF chief Christine Lagarde, now ECB head, also signed a letter supporting Powell.

Political Tensions:

President Trump has repeatedly criticized Powell for being slow to cut interest rates and stated Wednesday he doesn't care if undermining Fed independence would weaken the dollar and spark inflation. Trump has also attempted to fire Fed Governor Lisa Cook, whose termination challenge will be argued before the Supreme Court next week.

IMF Position:

Georgieva praised Powell as "a very good professional" and stressed that evidence-based central bank decision-making benefits businesses and households. She highlighted the Fed's global significance given the dollar's role as a reserve currency, stating "the Fed is precious for the Americans. It is very important for the rest of the world."

Market Implications:

The ongoing conflict between the administration and Fed leadership raises concerns about monetary policy independence, with potential impacts on dollar stability, inflation expectations, and investor confidence in U.S. institutional frameworks.