The independence of central banks is “paramount” for global economic stability and growth, the International Monetary Fund (IMF) has warned.
It comes a week after Federal Reserve chair Jerome Powell said he was the subject of an “unprecedented” US justice department criminal investigation over his testimony about the bank’s building renovations.
He said he believed this was due to Donald Trump’s anger over the Fed not cutting interest rates, but Trump said he did not know about the investigation.
The IMF’s comments came in its latest world economic outlook, where it described the global economy as “steady”, with headwinds from shifting trade policies offset by surging tech and AI investment.
Overall, the economic watchdog said global growth was projected to remain “resilient” at 3.3% this year – an increase from its previous forecast of 3.1% – and 3.2% in 2027.
The IMF estimates the UK grew by 1.4% in 2025, slightly up from its previous projection of 1.3%. Its forecast for this year remains unchanged at 1.3% and it predicts 1.5% growth in 2027.
Global inflation is expected to fall from an estimated 4.1% in 2025 to 3.8% in 2026 and further to 3.4% the following year.
In the UK, it said inflation is expected to return to the target 2% by the end of the year, as a weakening labour market continues to keep wage growth down.
The IMF said risks to the global outlook “remain tilted to the downside”, warning that if expectations about AI growth turn out to be overly optimistic an abrupt market correction could be triggered, and of a potential flare-up in trade tensions.
On the flip side, it said AI investment could transform into sustainable growth, and activity could be further lifted by a sustained easing of trade tensions.
In October, the IMF said so far there had been a “muted response” to the wave of tariffs imposed on imports to the US last year.
In its latest update it said trade tensions had continued to abate since October, and while tariffs and uncertainty were expected to continue having an impact, the effect on growth was expected to fade over the next two years.
But it warned that central bank independence was “paramount for macroeconomic stability and economic growth”.
“Preserving the independence of central banks, both legal and operational, remains critical for avoiding the risk of fiscal dominance, anchoring inflation expectations, and enabling them to achieve their mandates,” it said.
Powell’s disclosure that federal prosecutors had opened a criminal investigation into him marked an extraordinary moment in his long-running spat with the US president.
Actions over the Fed building were “pretexts”, he said. “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.”
It prompted central banks across the world declared “full solidarity” with the Powell, while three former heads of the bank strongly criticised the investigation.
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