ECB President Warns Trump: Undermining Fed Independence Risks Global Economy
ECB President Christine Lagarde cautions that any political interference in the US Federal Reserve under President Trump could destabilize both US and global markets.
Christine Lagarde, President of the European Central Bank, has warned that any attempt by President Donald Trump to influence the Federal Reserve would pose a grave threat to global economic stability. She emphasized that the Fed’s independence is crucial for maintaining balanced interest rate policy and controlling inflation.
Since taking office, Trump has publicly criticized Fed Chair Jerome Powell and even attempted to dismiss Governor Lisa Cook, accusing her of false mortgage statements. Trump has urged significant rate cuts to stimulate growth and reduce government borrowing costs, aiming to lower rates from 4.25% to below 1%. However, the Fed has kept rates steady amid inflation concerns, with only modest cuts expected soon—insufficient to satisfy the president.
Political Interference: A Serious Danger
In an interview with French radio station Radio Classique, Lagarde stated that subjecting the Fed to political directives would be “very worrying” for the US and world economies. She noted that the Fed’s mandate to promote employment and price stability depends on its autonomy from political pressures.
Lagarde also pointed out legal and structural barriers to any presidential takeover of the Fed: US law protects governors from removal except for gross misconduct, and the Fed’s committee—comprising seven governors and regional bank presidents—makes it difficult for any single administration to secure a controlling majority.
ECB President Christine Lagarde warns that undermining the Fed's independence would threaten both US and global economic stability.
This topic was reported by BBC News.
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