BoE’s governor publicly backed Powell, criticizing Trump’s ongoing attacks

Bank of England Governor Andrew Bailey said he was “saddened” by how U.S. President Donald Trump has kept going after Federal Reserve Chair Jerome Powell.

During a press briefing in London today, Bailey said, “Jay Powell is a dear friend of mine – obviously, we are very close, we work very closely together. He is a man of utmost integrity.”

That came after Bailey first said he wouldn’t comment on U.S. politics, but then did exactly that. His statement came as Trump’s attacks on Powell have intensified, with pressure on the Fed to slash rates again, despite signs that inflation could rise further.

European Central Bank President Christine Lagarde also backed Powell last month, calling him “the standard of a courageous central banker.” But in Washington, Trump is far from convinced. He wants someone new at the Fed’s helm and is preparing to appoint a replacement.

While weighing in on the U.S. situation, Bailey was also dealing with pressure at home. On the same day he made those comments, the Bank of England cut interest rates by 25 basis points, but the vote was anything but smooth.

The Monetary Policy Committee couldn’t agree. Four members voted to hold rates. Four voted to cut. One went even further and called for a 50 basis point cut. That deadlock forced a second round of voting just to get a majority for the 25-point move.

The split was a sharp change from the committee’s tone in June. Back then, the decision was less fractured; a 6-3 vote in favor of keeping rates steady. But by August, the growing uncertainty around inflation and economic growth had cracked consensus wide open.

That move sent the British pound up by 0.5%, in line with traders’ expectations. But it hit the UK stock market hard. The FTSE 100 dropped 0.7% as the stronger pound hurt big exporters.

Meanwhile, other European markets saw gains. Germany’s DAX closed up 1.1%, France’s CAC 40 rose 1%, and the Stoxx Europe 600 index jumped 0.9% thanks to positive earnings results.

Trump narrows Fed search as Waller pushes policy break

Inside the White House, the hunt for Powell’s replacement is well underway. Trump has said the list of candidates for Fed chair is down to three names. According to him, Treasury Secretary Scott Bessent, Vice President JD Vance, and Commerce Secretary Howard Lutnick are heading the search.

Among the candidates being looked at, Federal Reserve Governor Christopher Waller is gaining momentum. Bloomberg claims Waller, a Trump appointee, has impressed advisers with his ability to base policy on forecasts instead of only current economic data.

They also like that he understands how the Federal Reserve system works as a whole. He’s already spoken with Trump’s advisers but hasn’t yet met with the president himself.

Waller, who holds a Ph.D. in economics, recently drew even more attention by breaking from Powell and the rest of the Fed board when he voted for a 0.25-point cut, saying there were rising signs of weakness in the job market.

Just a few days after that meeting, a new jobs report showed that employment growth had dropped over the last three months, backing Waller’s concerns.

Still, Powell and others on the board have pushed for a patient approach. They want to see how Trump’s tariffs are affecting the economy before moving.

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