SARB governor Kganyago joins world's central bankers to back US Fed chair in face of Trump threats

Lesetja Kganyago, Governor of the South African Reserve Bank (SARB), has joined central bankers around the world in supporting the US Federal Reserve and its chairperson, Jerome Powell, in the face of threats from Donald Trump.

The US President this week intensified his attacks on Powell for not cutting interest rates faster. At the same time, the Fed chair is being threatened by a criminal indictment over cost overruns for renovating the institution's headquarters.

Kganyago is among 16 signatories to a public statement issued following Powell's release of a video statement in which he said that “public service sometimes requires standing firm in the face of threats”.

The signatories include 12 governors, ranging from the Bank of England and European central banks to the Bank of New Zealand.

The statement vouches for Powell's integrity, and highlights the need to maintain the independence of central banks:

"The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve. It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability."

Stephen Grootes gets comment from Sanisha Packirisamy, chief economist at Momentum Investments.

Packirisamy remarks that the world hasn't seen something like this in living memory, adding that the reasons behind the public statement really show that these central banks are trying to preserve institutional independence.

And this is something that our own central bank governor stands firmly behind - "that monetary policy should be driven by data outcomes and the outlook for things like inflation and the employment mandate in the US, and not be driven by electoral political cycles."

Packirisamy believes the move also helps to create an element of global market stability in view of the fact that the US dollar is still the world's reserve currency.

"It also provides a little bit more credibility into monetary policy making, and so I think it also helps to deter any kind of precedent it may set IF the Fed chair can be removed or prosecuted over such a disagreement."

To hear more insights into the release of the statement in support of the US Fed chair, listen to the interview audio at the top of the article