Global central banks rallied behind Federal Reserve Chair Jerome Powell on Tuesday, pushing back against a perceived political attack on the independence of the world’s most important financial institution. “We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell,” the officials said in a joint statement. “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.” The statement was signed by European Central Bank President Christine Lagarde on behalf of the ECB’s Governing Council, by Bank of England Governor Andrew Bailey as well as the heads of the Swiss, Swedish, Danish, Australian, Canadian, South Korean and Brazilian central banks. Pablo Hernández de Cos, general manager of the Bank for International Settlements and François Villeroy de Galhau, chair of the Board of Directors of the Bank for International Settlements, also signed the statement. Over the weekend, Powell disclosed that the Fed had been served with grand jury subpoenas by the Department of Justice, raising the threat of a criminal indictment tied to his congressional testimony on the ongoing renovation of the Fed’s Washington headquarters. In what amounted to a dramatic escalation in the standoff between the White House and the central bank, Powell used an unusually direct video message to argue that the legal action is politically motivated and part of a campaign of “intimidation,” designed to push the Fed into cutting interest rates more aggressively. “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” Powell said in language rare in its starkness for a serving Fed chair. Trump, a longtime critic who has piled personal insults on Powell since his reelection both through ad hoc comments and through his social media feed, denied any role in the investigation. Speaking to NBC News on Sunday, Trump said he was unaware of the probe but added that Powell is “certainly not very good at the Fed, and he’s not very good at building buildings.” The joint statement on Tuesday took a different view. “Chair Powell has served with integrity, focused on his mandate and an unwavering commitment to the public interest,” it said. “To us, he is a respected colleague who is held in the highest regard by all who have worked with him.” Expressions of support for Powell from around the world had already begun on Monday, with Bundesbank President Joachim Nagel telling POLITICO that: “The independence of central banks is a prerequisite for price stability and a great public good. Against this background, the recent developments in the U.S. regarding the Fed chairman are cause for concern.” Bank of France Governor Villeroy de Galhau, meanwhile, had told a  new year event at the ACPR regulator that Powell was “a model of integrity and commitment to the public interest.” POLITICO reported on Monday that the decision to subpoena the Fed had also raised concern among various White House officials, who are concerned that it may trigger volatility in financial markets and complicate efforts to keep the economy on track in an election year. Senior Republican Party lawmakers have also spoken out against the move.

Croatia, Estonia, Finland, Latvia, Lithuania and Portugal will face off for the European Central Bank’s No. 2 job, according to a statement from the Council of the EU. The crowded race for the vice presidency kickstarts a wider battle for a seat on the ECB’s coveted six-person executive board, the eurozone’s most powerful forum for economic and monetary policy. Four of the seats, including the presidency itself, will become vacant over the next two years. Competition will be fierce, as the eurozone’s largest economies will seek to maintain their influence on the board, leaving smaller countries with fewer seats to fight over. Eurozone finance ministers are set to pick the winner behind closed doors in a secret ballot when they meet in Brussels for this month’s Eurogroup meeting on Jan. 19. The winner will need at least 16 votes from the 21 ministers, representing around 65 percent of the eurozone’s population. Eurozone leaders formally propose the candidate to succeed the outgoing vice president, Luis de Guindos, whose eight-year term ends on May 31. The European Parliament and the ECB are entitled to an opinion about the final pick. Northern European applicants make up the bulk of the contenders, with Finland’s central banker, Olli Rehn, facing competition from Baltic neighbors. These include his central banking peers, Estonia’s Madis Müller and Latvia’s Mārtiņš Kazāks. Lithuania’s former finance minister, Rimantas Šadžius, completes the Baltic round-up. The other two applicants come from Southern Europe: Portugal’s ex-Eurogroup president, Mário Centeno, and the Croatian central bank governor, Boris Vujčić. The candidates are tentatively scheduled to face questions from MEPs behind closed doors before finance ministers meet on Jan. 19.

The Bank of England is set to cut interest rates on Thursday, after lower-than-expected inflation figures and signs of a weakening jobs market. Headline inflation slowed to 3.2 percent in November, from 3.6 in October, the Office for National Statistics said on Wednesday. That was the lowest since March and a much clearer drop than predicted by analysts, who had forecast a rate of 3.5 percent. “A cut tomorrow should be a no-brainer, with another to follow in February,” Peel Hunt chief economist Kallum Pickering said via social media, pointing to “No growth since summer, a labor market that is rapidly cooling, and a big downside surprise to inflation across the board in November.” The news comes only a day after labor market data from the ONS showed the unemployment rate rising to its highest level in over four years in October. The economy has struggled for growth in the second half of this year, after a sugar rush in the first quarter in which exporters rushed to get their goods to the U.S. before President Donald Trump could impose trade tariffs. The hangover from that — and the lingering uncertainty over the global economic outlook caused by Trump’s trade policy — has been severe. But at the same time, an unwelcome rise in inflation has stopped the Bank of England from cutting interest rates more quickly to support the economy. A raft of hikes in government- controlled prices such as energy bills and rail fares meant that inflation was rising for much of the year, leading it to peak at 3.8 percent in September. That was also partly due to companies passing on increases in labor costs due to a 6.7 percent hike in the National Living Wage and an increase in employers’ National Insurance contributions. Panmure Liberum chief economist Simon French said the wide range of goods and services now showing softening price trends showed that demand is now so weak that companies are having to absorb those price increases themselves instead. The government will be particularly relieved to have seen politically sensitive food prices, which have been a constant bugbear for the last couple of years, making the biggest contribution to the slowdown in inflation in November. Prices for clothing and footwear and for discretionary services such as restaurants and hotels also fell slightly. “As Christmas gifts go, this is a most welcome one,” said Danni Hewson, head of financial analysis at AJ Bell. “It’s the time of year when people put a few more things in their supermarket trolley, so news that food and alcohol inflation has fallen will be a boon for cash-strapped families.” The Bank has consistently said that inflation would fall once those factors passed out of the annual calculations, given that the underlying weakness of the economy. However, with the worst bout of inflation in half a century still fresh in everyone’s minds, it has been forced to keep the pace of policy easing “gradual and cautious”. Peel Hunt’s Pickering said that the scale of the slowdown could be enough to have some members of the Monetary Policy Committee voting for a half-point cut in the Bank Rate to 3.5 percent on Thursday. However, the consensus remains for a quarter-point cut to 3.75 percent. The pound still fell over half a cent against the dollar in response to the numbers, as traders penciled in more scope for easing next year, while the government’s borrowing costs in the bond market also fell.

The European Parliament could have an early say in the race for the European Central Bank vice presidency, a win for lawmakers after years of pushing for more influence over the EU’s top appointments. Eurozone finance ministers will begin the process of selecting a successor to Luis de Guindos on Thursday, according to a draft timeline seen by POLITICO and an EU diplomat who separately confirmed the document’s content. The deadline for submitting candidates will be in early January, although an exact date is still to be agreed.  According to the document, members of the Economic and Monetary Affairs Committee will have the right to hold in-camera hearings with all the candidates in January before the Eurogroup formally proposes a name to the European Council for appointment. This would mark a break with the past, when MEPs only got involved in the process after ministers had already had their say. Involving the Parliament at an earlier stage could influence the selection process, for example by giving it the chance to press for adequate gender balance in the list of candidates. This had been one of the Parliament’s demands in its latest annual report on the ECB’s activities. “The Parliament will play a stronger role this time,” the diplomat told POLITICO. So far, only Greece is considering proposing a woman for the vice president slot: Christina Papaconstantinou, who is currently deputy governor at the C. Finland, Latvia, Croatia and Portugal are all set to propose male candidates. The candidate picked by ministers will return to lawmakers for an official hearing, which should take place between March and April, according to the document. MEPs have limited power over the final appointment, but they will issue a nonbinding opinion, which is then adopted through a plenary vote. The new vice president will be formally appointed by the European Council in May, before taking office on June 1. So far, only Greece is considering proposing a woman for the vice president slot. | Aris Messinis/Getty Images The vice president’s position is the first of four to come up for rotation at the ECB’s Executive Board over the next two years. It wasn’t immediately clear if the other three appointments — including the one for a new president — will give the lawmakers the same degree of influence. CORRECTION: This article was updated on Dec. 9 to correct the spelling of the surname of the deputy governor of the Bank of Greece.

European Central Bank officials are growing increasingly jittery as Kevin Hassett — a close ally of President Donald Trump with very little central bank experience — emerges as the frontrunner to lead the U.S. Federal Reserve. A report last week by Bloomberg described Hassett, whom Trump picked at the start of the year to head the White House National Economic Council, as the “emerging front-runner” to replace current Fed Chair Jerome Powell.  Hassett’s rise has set off alarm bells in Frankfurt. European officials fear Hassett, under pressure from his boss in the White House, could push the Fed into cutting interest rates far more aggressively than Powell — even though that might risk unleashing another wave of inflation that could ripple out across the world. “If markets obtain a firm belief that the new [Fed chair] is subject to fiscal or any other dominance at the expense of the inflation target, there will be capital flight from the U.S. and an erosion of the value of the dollar with serious consequences worldwide — including higher inflation,” one ECB official said.  Like others interviewed for this story, the official spoke on condition of anonymity to discuss internal deliberations. “There is a possibility that the U.S. will have some inflationary bias … because of the political involvement,” a second ECB official warned. The Bloomberg report came just before Thanksgiving, after Treasury Secretary Scott Bessent had whittled down a long roster of candidates into a shorter list. Later during the holiday weekend, aboard Air Force One, Trump told reporters that “I know who I’m gonna pick,” but he told a cabinet meeting on Tuesday that he wouldn’t announce his decision until early in the new year.  Prediction markets such as Polymarket have made Hassett the odds-on favorite since then.  “For Trump, Hassett would be the best choice,” a third ECB official agreed, noting the candidate’s political proximity to the White House.  PRESSURE CAMPAIGN Trump has repeatedly attacked the Fed since returning to office in January, blasting Powell — whom he appointed as Chair during his first term — as a “numbskull” and a “major loser” for not cutting interest rates more quickly. The Fed withstood the pressure until September, when signs of a slowdown in the labor market emerged. It cut rates again in October, but Powell upset those expecting more easing soon by warning that another cut in December is by no means “a done deal.” Since then, several of his colleagues on the Federal Open Markets Committee have expressed reluctance to cut any further in December, pointing to an inflation rate stuck above the 2 percent target. More recently, as Jerome Powell has come under fire from the White House, European colleagues have rushed to defend him. Usually, when the labor market weakens, so does inflation, but that hasn’t happened this time. At both of his last two press conferences, Powell noted that the Fed’s dual mandate of keeping prices stable while pursuing full employment were currently “in tension” with each other.  Hassett has presented a very different view, telling CNBC in November that “inflation has come way down” from the 5 percent that it averaged during Joe Biden’s presidency andthat “the trajectory is really, really, really good if you look at it.” That’s despite U.S. headline inflation actually rising in four of the last five months.  MY GOOD FRIEND BEN That is why many in Frankfurt see alternative candidates — including the dovish but experienced Fed Governor Christopher Waller — as far safer choices. Also still in the running, according to various sources, are former Fed Governor Kevin Warsh, BlackRock fixed-income chief Rick Rieder, and sitting Governor Michelle Bowman. For decades, relations between the Fed and the ECB have been collegial and cooperative. Members of the small, globally connected circle of central bankers have long seen themselves as a kind of fraternity. During the height of the 2008 financial crisis, then-ECB President Jean-Claude Trichet liked to emphasize that closeness by repeatedly referring to Fed Chair Ben Bernanke as “my good friend Ben.” More recently, as Powell has come under fire from the White House, European colleagues have rushed to defend him. Lagarde told a Washington Post event in April that “I have … enormous respect for Chair Powell, and I know that he’s doing exactly what’s expected of him to serve the American people.”  Deutsche Bundesbank President Joachim Nagel echoed such comments more recently. Outside the eurozone, Bank of England Governor Andrew Bailey — another central banker anxious about the risk of financial volatility — called Powell “a man of the utmost integrity.” With Powell’s departure looming, ECB officials increasingly fear that this long-standing, trust-based relationship may be nearing its end, a fourth official told POLITICO. These concerns have already begun to influence the ECB’s strategic considerations in other areas, including liquidity policies and its own leadership succession. The ECB declined to comment. (Additional reporting by Ben Munster)

SOFIA — The euro is more than just a currency: it’s a geopolitical insurance policy in a fragmenting world. That was the message the EU’s most senior economic leaders sent to a skeptical Bulgarian public during a pro-euro charm offensive in Sofia on Tuesday. Bulgaria is due to adopt the euro on Jan. 1, 2026, but only about half the population supports joining the single currency. Fears about inflation and centralization of power in Brussels and Frankfurt — exacerbated by alleged Russian disinformation campaigns — have turned many against the project. In a push to ease these concerns, Economy Commissioner Valdis Dombrovskis and European Central Bank President Christine Lagarde each stressed the geopolitical benefits of joining the euro. “Bulgaria is joining the euro … at a point when there is more volatility, at a time when we have more shocks, one after the other, compounded, and at a time where the global order, as we have known it, is more fragmented, and when friends are probably fewer,” said Lagarde, adding: “It’s important to close ranks and to be together.” Lagarde said that during the financial crisis, the single currency had proved a defensive shield against shocks and depreciation. Dombrovkis said that, in itself, the adoption of the euro could help Bulgaria compensate for growing geopolitical risks in investors’ eyes. “In Baltic countries, despite being geopolitically exposed, the borrowing costs were lower than in Poland, and to a large extent investors assessed that [the euro] is a stabilizing factor,” he said. Bulgaria’s accession to the euro has been planned for more than a decade, but as the date got nearer, it has spawned conspiracy theories and populist politics, alongside more justified concerns about the currency changeover. Investigative reports have identified Russian-funded social media campaigns to undermine support for the euro. Last April, the far-right party Revival, which arranged several anti-euro protests over the last year, signed a deal with Vladimir Putin’s Russia United. The percentage of Bulgarians who support the euro has slightly increased in the last few months. | Nikolay Doychinov/Getty Images Asked about Russian influence on public opinion about the euro, Dombrovskis said: “It is not a secret that Russia is waging a hybrid war against Europe and European member states. It is provocation, acts of sabotage, violation of European airspace, meddling in political processes in the European Union, also in other countries, and it is spreading disinformation.” The percentage of Bulgarians who support the euro has slightly increased in the last few months, reaching 51 percent according to a survey cited by Finance Minister Temenuzhka Petkova — up from 45 percent earlier in the year. European Stability Mechanism chief Pierre Gramegna highlighted risks coming from Washington’s new approach to monetary policy and cryptocurrencies: “The U.S. administration is changing its position on so many topics, including on finance and currency, that being part of a large bloc is a huge advantage,” he said, adding people in Bulgaria are not fully conscious of this. “The risk entailed in the digital currencies can be faced better if we are in the euro area,” he said.

LONDON — Nigel Farage’s second-in-command called for a rethink of the U.K.’s interest rate-setting committee in a fresh sign that a Reform UK government could intervene in Britain’s independent central bank. Richard Tice, the deputy leader of the populist-right party that’s surging in U.K. polls, told POLITICO in an interview that there should be a debate over potentially sweeping changes to the make-up and role of the Bank of England’s Monetary Policy Committee (MPC).  “It’s not unreasonable to check whether or not we’ve got the membership of the MPC right. I mean, it’s almost 30 years,” he said, referencing the 1997 establishment of the MPC. “So you could say, well, have we got the membership right? Have we got the number of government representatives right? Should they or shouldn’t they have a vote? Have we got the mandate right?”  He added: “Should it have a growth mandate? We should have that debate.”  The BoE’s rate-setting committee is made up of nine members, including Governor Andrew Bailey, four senior central bank executives, and four independent external members appointed by the chancellor. A representative from the U.K. Treasury joins MPC meetings but is not allowed to vote.   Monetary policy has become increasingly politicized since the Covid-19 pandemic, after which inflation soared to double digits and the BoE raised rates to their highest levels in 15 years. The International Monetary Fund has warned the U.K. faces the highest inflation in the G7 this year and next.   Tice’s comments come ahead of a speech in the City of London Wednesday, where he is expected to set out a wide-ranging aspiration for financial services deregulation should Reform UK enter government in Britain’s 2029 general election. The deputy leader said the U.K. needs a “complete sea change” in how risk is approached in the City, and called for further red tape cutting on banks, hedge funds and other City giants. “No one’s stepping back and asking big, philosophical questions,” he said.   Tice told POLITICO his party is “happy” with the BoE’s independence, but said it is “ridiculous” that “no one dares to” question the performance of the central bank despite the U.K. “outsourcing all responsibility for massive issues that affect ordinary people.”  He argued the BoE had “failed” under Conservative Liz Truss, who was forced out as prime minister after bond yields spiked in the wake of a tax-cutting budget, leading banks to increase their lending rates. Tice accused City regulators of “missing” the issue of liability-driven investments (LDIs), which increased the strain on pension funds during that period, and said the Bank of England “could have actually stepped in and prevented the carnage.”  Truss has repeatedly blamed the Bank of England for failing to anticipate the market consequences of her budget. The central bank intervened after her mini-budget to calm the markets by implementing an emergency bond buying scheme.  WIDER REFORM Reform leader Farage, who is set to give a speech in the City Monday on his broader vision for the economy, has gone further, saying Bailey has “had a good run” and he “might find someone new” if the party wins the next election.  Bailey’s term is due to end in 2028, before the election. Tice did not rule out the prospect of a Reform government forcing out an underperforming central bank governor in future, saying: “At the end of the day, any public official has to be accountable for their performance.”  However, he declined to liken Reform’s stance to Donald Trump’s approach to the Federal Reserve, after the U.S. president repeatedly attempted to get rid of chair Jerome Powell.  Reform UK is currently ahead in the polls, as Britain’s Labour government continues to struggle with its messaging on the economy, immigration and frustration within Prime Minister Keir Starmer’s top ranks. Reform leader Nigel Farage, who is set to give a speech in the City Monday on his broader vision for the economy. | Mark Kerrison/Getty IMages Tice argued Labour — which has made growth its primary objective by rolling back 2008 financial crisis legislation — is adding rather than removing regulation, and accused it and the opposition Conservatives of “tinkering around the edges.”  “We’re not going to create any form of meaningful growth under the current trajectory of this government, or under the trajectory of any Conservative plans,” he said. “We are heading towards impoverishment and growth has relentlessly declined as borrowing has relentlessly increased, particularly if you look per head. And it requires a complete sea change in the way that we think about risk and reward.”  Asked whether a Reform government would go further than Labour on deregulation, Tice said: “Yes. We want to ask some very big questions about how we do things.”  Tice also argued that regulators such as the Financial Conduct Authority — which Farage hopes to strip of its role regulating banks — have “utterly failed to do their job.”  Asked if he believes Britain has now moved on enough since the 2008 financial crisis to strip away “protections,” he replied: “There are all sorts of different reasons why the ’08 crash happened. But we supposedly had all the mechanisms of protection there, and they failed. No one was properly held to account.” 

The European Central Bank left its key interest rate unchanged at 2 percent on Thursday, with the euro area economy still proving itself resilient and with inflation reasonably steady around the Bank’s target. The decision was consistent with guidance from policymakers that monetary policy is in “a good place,” giving them room to wait for year-end projections that will include the ECB’s first inflation forecast for 2028. The economy grew a faster-than-expected 0.2 percent in the third quarter of this year, while preliminary data showed inflation ticking up to 2.2 percent in October, calming fears about a possible undershoot. “The economy has continued to grow despite the challenging global environment,” the ECB said in its statement. “The robust labor market, solid private sector balance sheets and the Governing Council’s past interest rate cuts remain important sources of resilience.” At the same time, however, the ECB warned that “the outlook is still uncertain, owing particularly to ongoing global trade disputes and geopolitical tensions.” Risks remain abundant: beyond potential delayed effects from new U.S. tariffs, they include a further strengthening of the euro, as the U.S. Federal Reserve continues to lower its own rates. On Wednesday, the Fed cut rates by another quarter-point — the second consecutive reduction — citing a slowdown in job growth. Domestically, a delay to Germany’s fiscal stimulus measures and France’s ongoing budget crisis could also threaten to push the ECB out of its “good place.” Even so, a growing number of economists believe the central bank has reached the end of its easing cycle, a recent Reuters survey showed. While a slim majority of analysts last month expected one more rate cut before the end of 2026, nearly 60 percent now anticipate no further changes to borrowing costs in the current cycle.

The European Central Bank’s staff union is taking the bank to court, accusing ECB management of trying to silence and intimidate its representatives in violation of the principles of European democracy. The case, lodged with the European Court of Justice on Oct. 13, marks the latest escalation in a battle between union representatives and management, where relations have deteriorated since Christine Lagarde took over as ECB president in 2019. The action contests a series of letters the bank addressed to the International and European Public Services Organization (IPSO) union and one of its senior representatives “restricting staff and union representatives from speaking publicly about workplace concerns, such as favoritism and the ‘culture of fear’ at the ECB,” the union said in a statement. These letters constitute “an unlawful interference” with basic freedoms guaranteed by the EU Charter of Fundamental Rights and the European Convention on Human Rights, the union said. “Freedom of expression and association are not privileges; they are the foundation of the European project.” An ECB spokesperson said the bank does not comment on court cases, but that it “is firmly committed to the freedom of expression and the rule of law, operating within a clear employment framework that is closely aligned with EU Staff Regulations and is subject to European Court of Justice scrutiny.” The first letter, signed by the ECB’s Chief Services Officer Myriam Moufakkir, came in response to an interview given by union spokesperson Carlos Bowles to Germany’s Boersen-Zeitung daily paper, published May 7. In it, Bowles had warned that a culture of fear may contribute to self-censorship, groupthink and poor policy decisions. The interview came at a time when the ECB’s failure to anticipate the worst bout of inflation in half a century had provoked widespread and public soul-searching by policymakers. It also followed a union survey in which around two-thirds of respondents said being in the good graces of powerful figures was the key to career advancement at the ECB, rather than job performance.   IPSO IS A FOUR-LETTER WORD According to the IPSO union, Moufakkir responded with a letter stressing that staff and union representatives must not make public claims of a “culture of fear” within the institution or its possible effects on ECB operations — including its forecasting work, which had come under especially intense scrutiny. It also accused Bowles of breaching his duty of loyalty under the ECB’s internal code of conduct, and instructed him to refrain from public statements that could “damage the ECB’s reputation.” A later letter by Moufakkir, addressed to IPSO dated Aug. 1 and seen by POLITICO, spells out the thinking. In it she stresses that the right of “staff representatives … to address the media without prior approval … applies exclusively to ‘matters falling within their mandate’. It does not apply to the ECB’s conduct of monetary policy, including its response to inflation.” In his interview, Bowles made no reference to current or future policy but rather to a work environment that he said fostered groupthink. Lagarde herself had warned against such risks, denouncing economists the previous year in Davos as a “tribal clique” and arguing that a diversity of views leads to better outcomes. Bowles had made similar statements to the media before, such as in an interview with the Handelsblatt daily paper published in January 2016, without eliciting any reaction from the bank’s management. Contacted by POLITICO for this story, the ECB said it had “stringent measures to ensure analytical work meets the highest standards of academic rigor and objectivity, which are essential to the ECB’s mandate of price stability and banking supervision.” Moufakkir suggested that Bowles’ comments undermine trust in the ECB and that this trust is crucial if the ECB is to deliver on its mandate. “Freedom of expression, which constitutes a fundamental right, does not override the duty of loyalty to which all ECB staff are bound,” she argued. Bowles rejected that framing, arguing in a letter to Moufakkir that he had a “professional obligation” to address such issues and their impact on the ECB’s capacity to fulfil its mission. PAPER TRAIL The trouble, according to the union, is that Moufakkir addressed the first two letters to an individual union representative (Bowles) who was speaking on its behalf, effectively undermining the union’s collective voice.  In her email, the union said, Moufakkir also “heavily misrepresented” Bowles’s comments and accused him of misconduct without affording him a hearing. In her letter from Aug. 1, Moufakkir maintained that her original letter to Bowles “was not a formal decision” to be recorded in his personal file, but rather a “reminder and clarification of applicable rules.”  “Its purpose was not to intimidate or silence Mr Bowles but to highlight to him the importance of prudence and external communications about ECB matters,” she wrote. The union said it sees this framing as an effort by the ECB to shield itself from judicial review: the letter addressed to Bowles was marked ECB-CONFIDENTIAL and Personal, conveying the impression of an official document. According to a person familiar with the matter, a special appeal launched by Bowles to the executive board to retract Moufakkir’s instruction has since been dismissed — without addressing its substance — because the letters had no binding legal effect and were therefore inadmissible. That has now prompted the union to turn to the ECJ; a response to a second appeal by Bowles remains outstanding. The union said that what it perceived as attempts by the ECB to silence union representatives have succeeded: Previously scheduled media interviews have been “cancelled due to fear of retaliation.” When contacted for comment, Bowles declined, citing the same reason. WHAT COMES NEXT? The ECB will have two months to submit its defense to the court. As an EU institution, the ECB is neither subject to German labor laws nor to similar rules in other EU member states and instead enjoys extensive scope to set and interpret its own rules. Out of 91 employment-related court cases since the bank’s inception, the ECB has won 71. Regardless of the legal implications, the union warned that the ECB’s approach undermines its institutional integrity and damages its credibility.  “Silencing staff representatives or whistleblowers prevents legitimate issues from being addressed and erodes trust in the institution,” it said. “Reputation cannot be protected by censorship — it must be earned through sound governance, transparency and open dialogue.” It sees the letter as part of a broader pattern in which the ECB has sought to restrict trade union activity and control staff representation, including planned changes to a representation framework that would limit the participation of union members in the ECB staff committee. IPSO is the sole trade union recognized by the ECB and holds seven out of the nine seats on the ECB’s staff committee, which is elected by all ECB staff. The ECB, for its part, has rejected much of the criticism emerging from survey organized by the union and the staff committee, which showed widespread distrust of leadership, surging burnout levels, and complaints about favoritism. The ECB has called the surveys methodologically flawed and unreliable.

Russia’s Central Bank cut interest rates again on Friday, but the government immediately grumbled that more will be needed to stop the economy stalling. The CBR cut its key interest rate to 17 percent from 18 percent, pointing to signs that the inflationary pressure created by the war in Ukraine is easing. However, it warned that it feels things will get worse, not better, mainly due to the widening budget deficit. Once again, the CBR pointed out that the government has not yet made the necessary adjustments to prevent the budget from being affected by inflation, stating it will update its assessment of fiscal policy effects on inflation once the amendments are finally submitted to the Duma. “At our meeting in October, a lot will depend on the parameters of fiscal policy that will be ultimately proposed,” Governor Elvira Nabiullina told a press conference. In its statement, the CBR also noted a recent sharp rise in gasoline prices across Russia, caused by a succession of drone attacks by Ukraine on the country’s oil refineries. However, it expects the current price spike to pass. Before Friday’s meeting, some observers expected the CBR to cut by two full points, but Nabiullina said that hadn’t even been considered. She said the only proposals presented were for a one-point cut or no change. The decision prompted grumblings from the Ministry of Economic Development, whose head, Maxim Reshetnikov, warned at the start of the week that the economy was “cooling faster than expected” due to the CBR’s tight monetary policy. “Current inflation dynamics leave potential for continued easing of monetary policy,” Lev Denisov, the ministry’s head of forecasting, said in a statement. “This is extremely important for [the economy] to reach a trajectory of sustainable growth and to achieve the goals set by the president.” Nabiullina noted during her press conference that, while the headline inflation numbers have come down well off last year’s peak, there are still plenty of signs that the economy is close to overheating. Corporate borrowing immediately increased after the CBR’s first interest rate cut two months ago, consumer credit followed suit in August and wages are still rising faster than productivity throughout the economy, she said. The CBR targets an inflation rate of around 4 percent. Official data showed it slowing to 8.1 percent in August from 8.8 percent in July. However, many analysts believe the actual rate of inflation to be significantly higher, owing to the difficulty of compiling such statistics in a country that has undergone substantial structural changes since the start of the Ukraine war.