Markets need Powell, Fed, global central banks to defend independence at Jackson Hole

Powell and other central bank leaders from around the world should use their time in Jackson Hole this week to make the strongest possible defense of central bank independence — a principle that investors and markets will fully support, says global financial giant deVere Group.

The annual Wyoming gathering is usually dominated by academic research and carefully balanced speeches.

This year, however, the stakes are far higher. US President Donald Trump has intensified his attacks on Federal Reserve Chair Jerome Powell, criticizing him for not cutting interest rates more aggressively and pledging to replace him when his term ends.

Trump escalated this week by calling for the resignation of Fed Governor Lisa Cook, citing contested allegations. The offensive has rattled policymakers globally, heightening fears that political interference could undermine the credibility of central banks.

“This year’s Jackson Hole conference must not be business as usual,” says Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory and asset management organizations.

“The credibility of central banks is on the line, and credibility is everything in maintaining investor confidence, currency stability, and effective inflation control.

“Powell and his international colleagues need to use this moment to send an unmistakable message: monetary policy is not a tool of political convenience.”

The expected show of support for Powell from European Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey, and other central bankers will carry global significance.

Their expected defense of Powell will demonstrate that the world’s leading monetary guardians understand the dangers of political capture and remain committed to insulating monetary policy from partisan agendas.

“Markets will applaud central banks that assert independence clearly and forcefully,” says Nigel Green.

“Investors understand that when politicians are allowed to lean on rate-setting committees, inflation expectations can spiral, currencies weaken, and financial instability follows.

“This is why global markets are aligned with Powell and his peers on this fundamental issue.”

The lessons of history are clear.

In the 1970s, political pressure for easier money helped fuel spiraling inflation in the United States, which devastated household savings and damaged international confidence in the dollar. It took Paul Volcker’s decisive actions at the Fed — defying political demands and delivering punishingly high rates — to restore credibility.

“Central bankers today know these lessons. Independence is not some academic ideal, it’s the bedrock of effective economic management,” notes the deVere CEO.

The timing makes this year’s Jackson Hole especially sensitive.

US inflation, though lower than its 2022 peak, remains above target. In Europe and the UK, price pressures are more stubborn than expected.

Markets are delicately balanced, pricing in modest rate cuts but cautious about inflation roaring back.

“Investors want to hear a commitment to data-driven policy, not election-driven policy,” comments Nigel Green.

“If Powell, Lagarde, Bailey and others deliver that message, we’ll likely see a constructive market response.

“Treasury yields could stabilize, reducing recent volatility, while equities would benefit from stronger investor confidence. The dollar could strengthen as credibility anchors it, while the euro and sterling would firm if the ECB and Bank of England show equal determination.”

He adds: “Risk-sensitive currencies such as the Australian dollar and the yen will also be directly affected.

“If investors sense that independence is robust, these currencies will hold up well as risk appetite improves. If the opposite occurs — if markets believe politics is in the driver’s seat — volatility will spike, and capital could rush to safe havens, destabilizing global flows.”

Emerging markets, often first to feel the shockwaves of credibility loss, would face the gravest risks.

 “If political interference becomes embedded, emerging market currencies could fall sharply, bond spreads could widen, and investor capital would flee,” warns Nigel Green.

 For global investors, the defense of central bank independence is not just institutional housekeeping, it’s the foundation of stability across asset classes.

 Stock valuations, bond yields, and exchange rates all rest on the assumption that central banks act independently and predictably.

“Powell and his international colleagues should not shy away from a strong defense,” concludes Nigel Green.

“This is the moment to draw the line and state categorically that central banks will base decisions on data, not on political pressure.

“If they do, investors will support them, markets will reward them, and long-term stability will be reinforced. If they don’t, the cost for the global economy could be severe.”