On January 13, 2026, the heads of 14 major central banks and several former Federal Reserve chairs issued a rare joint statement backing Fed Chair Jerome Powell, hours after a cooler-than-expected core inflation reading landed the same morning. The show of unity came as the Department of Justice pursued a criminal investigation into Powell tied to his congressional testimony, a development markets had been watching closely for signs of political interference in monetary policy.
A Coordinated Show of Support
The joint statement was signed by the heads of the European Central Bank, the Bank of England, and the central banks of Australia, Brazil, Canada, Iceland, Indonesia, South Korea, New Zealand, Sweden, Denmark, Norway, Switzerland and South Africa, along with leadership of the Bank for International Settlements. "We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell," the statement read, praising his conduct with "integrity" and an "unwavering commitment to the public interest," and adding that "to us, he is a respected colleague who is held in the highest regard by all who have worked with him." Former Fed chairs Janet Yellen and Ben Bernanke separately warned that monetary policy was being turned into a "prosecutorial battlefield." The subpoenas at the center of the dispute stemmed from Powell's June 2025 Senate Banking Committee testimony on the cost of renovations to the Fed's Washington headquarters.
The Inflation Backdrop
The statement landed alongside the December CPI report, which showed headline inflation at 2.7% year-over-year, in line with expectations, while core CPI rose 2.6% annually and 0.2% monthly, both a tenth of a point below Dow Jones consensus forecasts. The milder core reading briefly reinforced expectations that the Fed could hold a steady, data-dependent course despite political pressure, even as traders continued to price the central bank standing pat at its January meeting and delaying further cuts until mid-year.
A Mixed Market Reaction
Equities initially firmed on the combination of the cooler core print and the central bank solidarity statement, with futures ticking higher and Treasury yields easing. The rally faded as the session progressed, however: the S&P 500 slipped 0.19% to close at 6,963.74 and the Dow Jones Industrial Average fell 0.8%, or 398.21 points, to 49,191.99, pressured by unrelated bank-earnings jitters after JPMorgan shares sold off despite beating estimates. The muted net reaction suggested investors viewed the central bank backing as reassuring but not decisive.
What It Means for Traders
The episode highlighted how institutional-credibility events now compete directly with data releases for market attention. A supportive signal from global central banks can cushion sentiment around Fed-related headlines, but it does not override company-specific catalysts like earnings, as the JPMorgan-driven Dow decline showed the same day. Traders navigating overlapping macro and political catalysts benefit from separating durable policy signals, such as inflation trends and rate-path expectations, from one-off headline risk tied to legal or political developments. Volatility around Fed communications and legal proceedings tied to the central bank is likely to remain elevated while the investigation continues.
Daily market analysis by BCM Markets.