ECB chief Christine Lagarde warns of ‘very serious danger’ if Trump undermines US fed

-ECB chief says undermining fed independence is a 'very serious risk'

Frankfurt — European Central Bank chief Christine Lagarde delivered a stark warning on Monday, cautioning that US President Donald Trump’s repeated attacks on the Federal Reserve risk triggering instability across the global economy.

Lagarde said any attempt by the White House to curb the Fed’s independence would be a “very serious danger” with far-reaching consequences. She noted that a politically subordinated Fed would severely damage both American financial credibility and the stability of world markets.

Since returning to power in January, Trump has escalated his pressure campaign against Fed chair Jerome Powell, demanding drastic interest rate cuts to less than 1 percent. The Federal Reserve’s current benchmark rate remains at 4.25 to 4.5 percent, as policymakers resist White House calls for cheap money amid stubborn inflation risks.

Trump has openly lashed out at Powell and other governors, even attempting last month to remove Lisa Cook from the board. The confrontation underscores the president’s disdain for independent institutions, which he sees as obstacles to his political agenda.

Lagarde stressed that although it would be “difficult” in practice for Trump to seize control of Fed policy, the mere perception of interference has already unsettled international markets. She warned that the destabilization of the world’s most powerful central bank would ripple outward, jeopardizing economic recovery worldwide.

“If US monetary policy were no longer independent and instead dependent on the dictates of this or that person, then I believe that the effect on the balance of the American economy could, as a result of the effects this would have around the world, be very worrying, because it is the largest economy in the world,” she said, according to Reuters.

The Federal Reserve’s mandate is to ensure maximum employment and price stability, operating outside the direct control of the US government. But Trump’s relentless campaign for ultra-low rates highlights his readiness to gamble with global financial stability in pursuit of short-term political gains.

Economists say a modest cut later this month is likely, but it will fall far short of the president’s demands. That gap may fuel another wave of attacks from the White House, putting Powell’s leadership further in Trump’s crosshairs.

For Europe and emerging economies, Lagarde’s remarks reinforce concerns that Washington’s internal dysfunction could once again export volatility abroad. As she put it, the credibility of the Fed is not just an American concern, but “a cornerstone of global economic stability.”

According to the BBC, Trump’s war on the Fed has intensified, leaving allies and rivals alike questioning whether the world’s largest economy can still be trusted to safeguard financial order.

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Europe Desk
The Eastern Herald’s European Desk validates the stories published under this byline. That includes editorials, news stories, letters to the editor, and multimedia features on easternherald.com.

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