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Every living former Federal Reserve chief on Monday attacked the Department of Justice’s probe into central bank head Jay Powell, accusing the Trump administration of running the US like an emerging market. 

Ex-Fed chairs including Janet Yellen, Ben Bernanke and Alan Greenspan signed a statement blasting what they described as an “unprecedented attempt to use prosecutorial attacks to undermine [Fed] independence”.

“This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly,” wrote the group, which included top economic officials from both Republican and Democratic administrations.

“It has no place in the United States, whose greatest strength is the rule of law, which is at the foundation of our economic success,” the statement added.

The stark rebuke came after it emerged late on Sunday that prosecutors had opened a criminal investigation into Powell over a $2.5bn renovation of the Fed’s headquarters in Washington.

Powell blasted the DoJ probe as a pretext to attack him over interest rates, which Donald Trump has repeatedly pressured the central bank to slash.

“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” the incumbent Fed chair said on Sunday.

The Fed has cut rates at each of its past three meetings, leaving them at a three-year low of 3.5 to 3.75 per cent. But the reduction has not been fast enough for Trump, who has said borrowing costs should be as low as 1 per cent and has labelled Powell a “moron” and a “numbskull” for not acting more quickly.

But the DoJ investigation, which could lead to a criminal indictment of Powell, marks an escalation that has stoked serious concerns among economists about the future independence of the US central bank.

In Monday’s letter, which was signed by 13 of America’s most prominent economists, the signatories wrote: “The Federal Reserve’s independence and the public’s perception of that independence are critical for economic performance.”

As well as the three living ex-Fed chairs, the letter was also signed by former Treasury secretaries Timothy Geithner, Jacob Lew, Robert Rubin and Hank Paulson, alongside a host of senior economic advisers to Presidents Joe Biden, Barack Obama, George W Bush and Bill Clinton.

These included Jared Bernstein, Jason Furman, Glenn Hubbard, Gregory Mankiw and Christina Romer, all former chairs of the Council of Economic Advisers, and ex-IMF chief economist Kenneth Rogoff.

Trump has denied any knowledge of the DoJ investigation. The president is expected to announce a replacement for Powell, whose term ends in May, in the coming weeks.