Durban (South Africa) (AFP) – The G20 finance ministers stressed Friday that central banks must remain independent, after months of escalating attacks by US President Donald Trump on Federal Reserve boss Jerome Powell. It was the first communique under South Africa’s G20 presidency and marked a rare consensus for a bloc jolted by the drastic trade policies of its richest member, the United States.
“Central banks are strongly committed to ensuring price stability…and will continue to adjust their policies in a data-dependent manner,” the group, whose members account for more than 80 percent of the world’s economic output, said after a finance ministers’ meeting in South Africa. “Central bank independence is crucial to achieving this goal,” it said in the statement, also signed by the United States.
Trump has repeatedly lashed out at Powell for not lowering interest rates more quickly, calling the central banker a “numbskull” and “moron”. US Treasury Secretary Scott Bessent did not attend the two-day meeting in the port city of Durban, with Washington instead represented by acting undersecretary for international affairs Michael Kaplan. Bessent also skipped a similar meeting in February and US Secretary of State Marco Rubio snubbed a meeting for G20 foreign ministers.
Trump insists the Fed should boost the US economy by cutting rates from the current range, 4.25 to 4.5 percent. The US central bank has meanwhile adopted a wait-and-see attitude, holding rates steady as it continues its plan to bring inflation to its long-term target of two percent. On Friday, Trump ramped his criticism of Powell, whose term ends in May 2026, calling him “one of my worst appointments”. The attack followed suggestions the 72-year-old banker could be dismissed for “fraud” over his handling of a renovation project at Federal Reserve headquarters.
Since returning to power in January, Trump has upended global trade rules, announcing a host of drastic stop-start tariffs that has unnerved investors and governments around the world, including the G20 — a grouping of 19 nations and the European Union and African Union. The US tariffs are due to jump from 10 percent to various higher levels for a list of dozens of economies, including the EU, come August 1. A separate 50-percent duty on copper imports will also come into force.
The G20 said there was a need to strengthen cooperation and acknowledged the World Trade Organization needed reform “to be more relevant and responsive in light of today’s realities”. Washington is due to succeed Pretoria as G20 chair at a summit in November in Johannesburg, although Trump’s attendance remains uncertain.
“The fact that we were able to reach a joint communique among other things outlining the global economic challenges or uncertainty coming from trade tensions shows that also US is willing to have constructive engagement,” said EU Commissioner for Economy Valdis Dombrovskis. The discussions, at a luxury resort on the east coast, had focused on how to “preserve rules-based multilateral trading system,” Dombrovskis added.
Reaching consensus was no small feat, acknowledged South Africa’s Finance Minister Enoch Godongwana. “It has been a difficult one in this environment. To achieve what we have done in that environment, I think is a huge success,” he told journalists.
The International Monetary Fund said “high levels of policy uncertainty” had dominated the talks and urged countries to resolve trade tensions. The leaders have set an objective of “finding a balanced and practical solution” on a global minimum tax of 15 percent, aimed at stopping international corporations from slashing their tax bills by registering in nations with low rates. Anti-poverty charity Oxfam said G20 inaction would amount to betrayal. “The money is there — it’s time to tax the super-rich and fossil fuel excessive profits,” it said. Last month, the Group of Seven nations agreed to exempt US multinational companies from the OECD-negotiated tax, in a win for Trump’s government, which pushed hard for the compromise.
© 2024 AFP
