European Central Bank (ECB) President Christine Lagarde warned on Monday that US President Donald Trump’s potential move to dismiss US Federal Reserve Chairman Jerome Powell could pose a “serious threat” to both the American and global economies.
In an interview with French broadcaster Radio Classique, Lagarde stressed that the independence of the US Federal Reserve is crucial for economic stability worldwide.
“If US monetary policy ceases to be independent and becomes subject to the dictates of one person or another, the consequences for the balance of the US economy – and the ripple effects across the globe – could be deeply concerning,” Lagarde said.
Trump’s Clashes With Federal Reserve Chairman Jerome Powell
President Trump has repeatedly criticized Powell for refusing to aggressively lower short-term interest rates.
He has threatened not only to dismiss Powell but also to reshape the Federal Reserve Board to reflect his economic vision more closely.
These tensions have fueled concerns about whether the Fed can maintain its independence and effectively address inflation while resisting political pressure.
Powell’s Future at the Federal Reserve
Jerome Powell is scheduled to step down as Fed Chair in May 2026, even though his official term does not expire until 2028.
The announcement has heightened uncertainty in financial markets already wary of potential leadership changes.
Meanwhile, Trump recently nominated his advisor Steven Miran to fill a vacant seat on the Federal Reserve Board, following the departure of Adriana Kugler.
Broader Economic Implications
The dispute has sparked debate among economists and central bankers worldwide.
ECB policymaker Olli Rehn previously cautioned that Trump’s escalating attacks on the Federal Reserve could significantly impact financial markets, global inflation trends, and real economic activity.
With the US being the world’s largest economy, any disruption in the independence of its central bank could have far-reaching consequences across international markets.
