ECB Chief: Trump’s Fed Fight a “Serious Danger” to Global Economy

European Central Bank President Christine Lagarde has sounded a stark warning: President Trump’s aggressive moves to interfere with the U.S. Federal Reserve could destabilise not just American but also global economic stability.

Lagarde cautioned that any weakening of the Fed’s independence, especially attempts to remove top officials such as Chair Jerome Powell or Governor Lisa Cook, would pose a “very serious danger” to both the United States and the world.

She emphasised that monetary policy, when subject to political whims rather than objective decision-making, risks derailing price stability and employment goals. Given the Fed’s central role in the global financial system, any disruption could echo worldwide.

This warning comes amid Trump's repeated verbal attacks on Powell and Cook, including attempts to dismiss them. Such manoeuvres have unsettled international markets, introducing uncertainty amid upcoming economic data releases and speculation over potential interest rate decisions.

Concurrently, a recent Financial Times poll of economists underscores widespread concern that Trump’s undermining of the Fed threatens its long-term credibility. A majority of survey respondents expressed fears of heightened inflation, weakened investor confidence in the U.S.

debt, and a shift in Fed policy priorities favouring employment and political aims over addressing inflation.

Economists warn that the cascading effects could include market volatility, asset bubbles, and compromised crisis response capabilities. The ECB and the global central banking community more broadly view safeguarding the Fed’s autonomy as crucial for preserving economic resilience.

Sources: Reuters, The Guardian, Financial Times