New Delhi, Jan. 14 -- The latest spat between US Federal Reserve chair Jerome Powell and US President Donald Trump strikes at the very heart of what central banks hold dear as the key to not just long-term financial stability, but also economic growth: central bank independence.

Calling the Department of Justice probe into the testimony he gave last year to a Senate panel on renovations of Fed buildings "unprecedented," Powell said he believed the action was a direct consequence of the president's anger over the Fed's refusal to reduce interest rates despite White House pressure.

There seems little scope for scandal in a prima facie case of cost-overruns and a lavish budget for a premises upgrade. But history has shown that central bank...