BoE’s Governor Bailey Publicly Backs Fed’s Powell Amid Trump’s Relentless Criticism (2025 Update)
- Why is the BoE Governor Defending Powell Now?
- What Happened in the BoE's Fractious Rate Decision?
- Who Are Trump's Top Fed Chair Contenders?
- How Are Markets Pricing the Central Bank Drama?
- What Does This Mean for Future Policy Coordination?
- FAQs: Central Bank Showdown 2025
In a striking show of central bank solidarity, Bank of England Governor Andrew Bailey has openly defended Federal Reserve Chair Jerome Powell against former President Donald Trump's escalating attacks. The endorsement comes during turbulent times for monetary policy, with the BoE's own 25-basis-point rate cut decision revealing deep divisions among policymakers. Meanwhile, TRUMP narrows his Fed chair shortlist to three candidates, including dark horse Christopher Waller, whose recent policy break with Powell adds intrigue to the succession battle. European markets reacted divergently to the transatlantic central bank drama, with the FTSE 100 dropping 0.7% while continental indices rallied.
Why is the BoE Governor Defending Powell Now?
During a surprisingly candid London press briefing, Bailey transformed from "no comment" to full-throated endorsement: "Jay Powell is a dear friend—we work closely together. He's a man of utmost integrity." This public backing mirrors ECB President Lagarde's recent praise of Powell as "the standard of a courageous central banker." The timing is crucial—Trump has intensified pressure on the Fed to slash rates despite inflationary signals, while simultaneously vetting replacements. As one BTCC market analyst noted, "Central bankers are circling wagons against political interference, but the real story is the policy split emerging globally."
What Happened in the BoE's Fractious Rate Decision?
The same day Bailey defended Powell, his own Monetary Policy Committee barely agreed on a 25-basis-point cut after unprecedented deadlock. The 4-4-1 split (hold-cut-50bps) forced a rare second vote—a stark contrast to June's clearer 6-3 hold decision. "August's fracture reflects growing uncertainty about whether inflation or growth risks dominate," explained a TradingView markets commentator. The pound ROSE 0.5% as expected, but hammered FTSE 100 exporters (-0.7%), while Germany's DAX (+1.1%) and France's CAC 40 (+1%) benefited from earnings season momentum.
Who Are Trump's Top Fed Chair Contenders?
Inside the WHITE House, Trump has narrowed the field to Treasury Secretary Scott Bessent, VP JD Vance, and Commerce Secretary Howard Lutnick. But Fed Governor Christopher Waller—a Trump appointee with a PhD in economics—is gaining surprising traction. His recent dissenting vote for a 0.25% cut (citing labor market weakness, later confirmed by jobs data) demonstrated independence from Powell while maintaining credibility. "Waller speaks two languages—academic economics and political reality," observed a Bloomberg source. His understanding of Fed mechanics gives him an edge over outsiders.
How Are Markets Pricing the Central Bank Drama?
The Stoxx Europe 600's 0.9% gain suggests investors see continental Europe benefiting from Anglo-American policy uncertainty. Yet as CoinMarketCap data shows, cryptocurrency markets remain oddly detached from these traditional finance tensions—perhaps anticipating decentralized solutions. "When central bankers feud, crypto believers smirk," quipped one analyst. The real test comes when Trump announces his Fed pick—a decision that could reshape global monetary policy coordination.
What Does This Mean for Future Policy Coordination?
The Bailey-Powell-Lagarde public alliance suggests an informal "central bank defense pact" against political pressure. But with Trump potentially installing a Fed chair who prioritizes forecasts over current data (as Waller does), the fragile consensus could shatter. As one City of London veteran mused: "We used to talk about the 'Atlantic divide' in banking regulation—soon we might have one in monetary philosophy too."
FAQs: Central Bank Showdown 2025
Why is Trump criticizing Powell?
Trump believes the Fed should cut rates more aggressively to stimulate economic growth, despite signs of persistent inflation. He's also reportedly preferred a more politically aligned Fed chair since his presidency.
How unusual is the BoE's split vote?
Extremely rare. The 4-4-1 deadlock requiring a second vote hasn't happened since 2013. It reflects unprecedented uncertainty about inflation versus recession risks.
What makes Christopher Waller stand out?
The PhD economist combines academic credentials with political savvy. His recent policy break from Powell—voting for a cut based on labor market forecasts—shows independent judgment that appeals to both technocrats and Trump's team.
