Global Markets Watch Fed Crisis as RBI Governor Defends Central Bank Autonomy

India’s RBI Governor has highlighted central bank independence as the US Federal Reserve faces subpoenas and political heat, putting global monetary credibility under spotlight.

Reserve Bank of India Governor Sanjay Malhotra has spoken up for central bank autonomy at a time when the US Federal Reserve is dealing with a high-stakes legal and political crossfire. In an NDTV Profit interaction published on January 13, 2026, Malhotra said independence is “very important” and should be preserved collectively. 

The timing is sharp because Fed Chair Jerome Powell has confirmed the Fed received grand jury subpoenas linked to his testimony on a $2.5 billion renovation project in Washington.

What Is Driving The Independence Debate?

The immediate issue is confidence. Markets price policy credibility, not just policy rates. When a central bank is seen as vulnerable to political pressure, investors can start demanding a higher premium for risk. 

The current flashpoint is in the US, where Powell has described the Justice Department action as a “pretext” to gain more influence over interest rates, while the probe is tied to his remarks on renovation cost overruns. Malhotra’s public emphasis, coming from India, lands as a signal that policy frameworks must stay insulated.

Before getting into the details, here is a clean sequence of the key dates.
 

That timeline is why Malhotra’s comment is being read beyond India’s borders.

Inside Malhotra’s Message And Why Markets Noticed?

In the January 13, 2026 NDTV Profit coverage and interview format, Malhotra stressed that independence is critical because monetary policy should not be run like a day-to-day executive function. He framed it as a broad global principle, not a local talking point, and said the world should “collectively” preserve it.

The subtext is international spillover. If the Fed’s autonomy is questioned, the impact travels through the dollar, bond yields, and risk appetite for emerging markets. Reuters also reported market jitters around the story, with the dollar reacting as headlines broke around the criminal probe angle and subpoenas.

Powell’s own timeline adds fuel. His term as chair ends in May, yet Reuters noted he can remain on the Fed board until January 31, 2028, which affects how much room the White House has to reshape the 7-member board in the near term.

To add a policy anchor amid the noise, Reuters reported New York Fed President John Williams reiterating the 2% inflation goal and saying he expects inflation to be on target in 2027.

How The Fed Fight Built Up Over The Past Weeks

In the last 48 hours, global voices have gone on record. Reuters reported Chicago Fed President Austan Goolsbee calling Powell a “first-ballot hall-of-fame” chair and warning that attacks on independence threaten a country’s ability to control inflation, noting how tough it has been to bring inflation down over the past 5 years. 

Reuters also reported Finnish central bank Governor Olli Rehn saying any erosion of Fed independence could structurally push inflation higher and weaken bond market credibility, raising financial stability risks.

Separately, Fitch’s view has entered the conversation through Reuters reporting: Fed independence is described as a key factor supporting the US AA+ sovereign rating framework.

What Top Stakeholders Are Saying?

Malhotra, on January 13, 2026, said independence is “very important” and should be preserved collectively. Powell, on January 11, 2026, said the Fed received grand jury subpoenas tied to his testimony. Goolsbee and Rehn, on January 14, 2026, warned that undermining independence can raise inflation risks and dent credibility.

LoansJagat reported on October 16, 2025 that Malhotra had flagged a softer growth outlook, underscoring the RBI’s focus on macro stability rather than political cycles.

Conclusion

With subpoenas, renovation scrutiny, and open pushback from global central bankers, the Fed episode is turning into a credibility test. Malhotra’s timing positions India as firmly aligned with rules-based monetary policy.