The ECB’s annual Sintra retreat brought central bankers to focus on political and technological threats against monetary policy instead of inflation. The Federal Reserve faced political pressure from the U.S. while stablecoins gained prominence as major topics of discussion throughout both official sessions and casual barroom discussions.
The independence of the Fed faced significant concern among participants. The repeated criticism of Fed Chair Jerome Powell by President Trump together with replacement rumors has created uncertainty among monetary officials worldwide. Two-thirds of central bank reserve managers according to a UBS Asset Management survey believe the Federal Reserve faces an imminent threat to its independence.
During the panel discussion Powell defended the Fed’s independence by stating the institution maintains complete political neutrality in its pursuit of inflation and employment goals. ECB President Christine Lagarde expressed full backing for the statement by stating she would maintain the same position in similar circumstances.
The change in tone indicates central banks face growing concerns about their position in a world marked by rising geopolitical threats and digital currency adoption and economic fragmentation.
