Bank of Canada Governor Tiff Macklem told parliament he expects the Federal Reserve’s culture and conduct to continue unchanged under its incoming chairman, dismissing concerns about Fed independence post-Powell.

Macklem was speaking Monday afternoon Canada time.

Summary:

• Bank of Canada Governor Tiff Macklem said he believes the culture and conduct of the US Federal Reserve will continue as it has historically, per his testimony to the House of Commons on Monday
• Macklem made the remarks in response to parliamentary questions about the risk of the Fed losing its institutional independence as Chairman Jerome Powell’s term approaches its end on May 15, according to his testimony
• The Bank of Canada governor expressed confidence in the continuity of the Fed’s institutional character through the leadership transition, per the House of Commons testimony

Bank of Canada Governor Tiff Macklem has moved to calm concerns about the future of Federal Reserve independence, telling parliament on Monday that he expects the central bank’s culture and conduct to remain intact through the leadership transition that will follow Jerome Powell’s departure as chairman on May 15.

Appearing before the House of Commons, Macklem was asked directly about the risk that the Fed could lose its institutional independence under its incoming leadership, a concern that has gained traction in financial markets and policy circles as the end of Powell’s term approaches and speculation about his successor’s relationship with the White House intensifies. Macklem’s response was unambiguous: he believes the Fed’s culture and comportment will continue as they have in the past.

The remarks carry weight beyond their brevity. As governor of one of the world’s most closely watched central banks and the steward of an economy deeply intertwined with that of the United States, Macklem is among the most credible external voices on the question of Fed institutional integrity. His willingness to offer a public and positive assessment of the Fed’s likely trajectory is a form of peer endorsement that markets will register, even if the underlying uncertainty about the incoming chair’s independence from political pressure has not been resolved.

The question of Fed independence has become increasingly pointed as Powell’s May 15 end date approaches. Powell has been a consistent and at times publicly combative defender of the central bank’s autonomy, and his departure opens the possibility, in the minds of some market participants, of a successor more inclined to accommodate political pressure on rate settings. In an environment already complicated by Middle East-driven inflation, a Fed perceived as less than fully independent would represent a significant additional source of instability for rate and currency markets globally.

Macklem’s testimony does not resolve those questions, but it signals that Canada’s central bank is not building a Fed independence breakdown into its working assumptions, a baseline assessment that will inform how the Bank of Canada thinks about the cross-border rate and currency dynamics that matter enormously for the Canadian economy.