Collective support for Powell! G20 finance ministers rare unity, this year's first joint communiqué emphasizes central bank independence and multilateral cooperation

As U.S. President Donald Trump launched a trade war and repeatedly criticized and threatened the leadership of Federal Reserve Chairman Jerome Powell, the finance ministers and central bank governors of the G20 reached a rare consensus, emphasizing in the joint communiqué of the meeting that the independence of central banks is "crucial" for maintaining price stability, collectively supporting Powell.

On Friday, July 18, local time, G20 finance ministers and central bank governors held a meeting in South Africa, after which they released the first G20 joint communiqué since October of last year. The communiqué clearly stated:

"Central banks are firmly committed to ensuring price stability, fulfilling their respective mandates, and will continue to adjust policies based on data. The independence of central banks is essential to achieving this goal."

The G20 communiqué released this Friday also acknowledged that the global economy faces uncertainties brought about by "ongoing war conflicts, geopolitical and trade tensions," emphasizing the importance of strengthening multilateral cooperation. Although the over 2,000-word communiqué did not directly use the term "tariffs," the impact of trade tensions was pervasive throughout.

Lesetja Kganyago, Deputy Finance Minister of South Africa, the G20 rotating presidency, stated that the outcomes included in the communiqué "have been agreed upon by all (G20) members," focusing on "strategic macroeconomic issues."

German Finance Minister Olaf Scholz described the communiqué as "a significant achievement of the G20 rotating presidency," noting that the presidency conducted the negotiations with a prudent attitude and skilled techniques, and that reaching the communiqué in the current complex environment "sends a strong signal in support of multilateralism."

Central Bank Independence Becomes a Key Topic

Central bank independence became the core topic of this meeting. Lesetja Kganyago, Governor of the South African Reserve Bank, stated at a press conference after the G20 concluded that the issue of independence "was strongly reflected in the dialogue."

The G20 communiqué explicitly supports central banks in each country to strongly ensure price stability according to their respective responsibilities and to continue adjusting policies based on data.

These statements are seen as support for Powell. Since Trump took office, he has repeatedly attacked Powell for the Federal Reserve's inaction, publicly calling him a "fool," claiming that the U.S. does not have high inflation, and demanding significant interest rate cuts. This week, he even hinted at possibly firing him due to mishandling of the Fed's headquarters renovation project. After the U.S. CPI was released on Tuesday, Trump again urged the Fed to act immediately, stating that interest rates should be cut by 3 percentage points.

Against the backdrop of Trump's repeated pressure, the consensus among G20 officials emphasizing independence is even more valuable, as the U.S., as the wealthiest member of the G20, is undergoing a policy upheaval that tests the world order established after World War II.

Powell and U.S. Treasury Secretary Steven Mnuchin, who was visiting Japan, were absent from this G20 meeting, represented by Federal Reserve Vice Chairman Jefferson and Acting Deputy Treasury Secretary Michael Kaplan.

Trade Tensions Affect Global Growth

The communiqué acknowledged that the global economy faces "geopolitical and trade tensions" and other complex challenges, stating:

"The global economy is facing increasing uncertainty and complex challenges, including ongoing wars and conflicts, geopolitical and trade tensions. We emphasize the importance of strengthening multilateral cooperation to address existing and emerging risks to the global economy The communiqué spans five pages and does not use the term "tariff" at all, only indirectly mentioning the impact of tariffs through phrases like "trade tensions."

However, Trump's tariff policy has reshaped global trade rules. For more than three months, the Trump administration has imposed a so-called baseline tariff of 10% on all U.S. imports, as well as tariffs as high as 50% on steel and aluminum, and 25% on automotive products. The International Monetary Fund (IMF) downgraded its global growth forecast for 2025 from 3.3% in January to 2.8% in April this year.

IMF First Deputy Managing Director Gopinath stated at the end of the meeting that financial conditions have improved, but it is important to remain vigilant. The IMF will update its global economic outlook at the end of July, noting that "downside risks continue to dominate the outlook, and uncertainty remains high."

The communiqué reaffirms the importance of the World Trade Organization (WTO) in advancing trade issues while acknowledging that "the WTO faces challenges and requires meaningful, necessary, and comprehensive reforms."

Multilateral Cooperation Still Supported by Consensus, but Wording is Cautious

Despite differences, the G20 reached consensus on several issues. The communiqué commits to addressing the debt vulnerabilities of low- and middle-income countries in a "predictable, timely, orderly, and coordinated manner," further strengthening the implementation of the G20 common framework.

On climate issues, the communiqué does not directly use the term "climate change," but states: "Frequent extreme weather events and natural disasters have impacted economic growth, financial stability, and price stability."

The communiqué also does not mention the Russia-Ukraine conflict or the conflict between Israel and Hamas in Gaza, instead referring to it generically as "ongoing war conflicts."

Josh Lipsky, Chair of International Economics at the Atlantic Council, commented that the "biggest news" from this G20 summit is that they issued a joint communiqué rather than just a statement from the host country, signaling a positive indication that the U.S. will serve as the rotating presidency for a year. This indicates some momentum