Bank of England Governor Andrew Bailey said he is "very concerned" about threats to central bank independence as pressure on the U.S. Federal Reserve from President Donald Trump intensifies.
Bailey told members of Parliament on Wednesday that the attacks on the Fed had created "a very serious situation" and called threats to central bank independence "a very dangerous road to go down." The comments came amid a barrage of public pressure from Trump for faster, deeper interest-rate cuts and after the president moved to remove Federal Reserve Governor Lisa Cook — an action described by observers as unprecedented — following repeated threats to oust Fed Chair Jerome Powell.
Bailey's remarks echoed warnings from European Central Bank President Christine Lagarde, who has said the U.S. president's attacks on the Fed pose a "serious danger" to the global economy. Central bank independence refers to the ability of a nation's monetary authority to set interest rates and manage the financial system free from direct political interference, an arrangement designed to prioritise long-term economic stability over short-term political considerations.
The Federal Reserve has been formally independent in its policy role since 1951, and it is widely regarded as the world's most influential central bank. Critics of political pressure on central banks argue that such interference can undermine credibility, complicate inflation-fighting efforts and unsettle financial markets that rely on predictable, rule-based monetary policymaking.
Bailey made his comments to MPs in the context of ongoing global economic uncertainty and a string of confrontations between the White House and the Fed. U.S. officials have refused to acquiesce to calls for rate cuts when they judge inflation and employment metrics warrant a different approach. Trump has publicly called for more aggressive easing of monetary policy, arguing that lower interest rates would aid economic growth ahead of the 2024 election cycle.
The removal of a sitting Fed governor and repeated public threats against the Fed chair represent an escalation that central bankers and some economists say could have broader implications beyond U.S. borders. Central bank independence is considered a key pillar of modern macroeconomic governance, and actions perceived to weaken that independence have prompted comment from counterparts in other jurisdictions.
Bailey, speaking as governor of the Bank of England, did not outline specific policy responses but emphasised the principle that monetary policy should be conducted without direct political pressure. His warnings add to mounting voices in international financial circles urging respect for institutional boundaries that, they say, help anchor inflation expectations and maintain financial stability.
Lawmakers and market participants will be watching developments in Washington for further signals on the relationship between the U.S. administration and the Federal Reserve, and for any potential ripple effects on global monetary policy coordination and market confidence.