2025-09-01T11:50:00Z

Imagine a world where the independence of the U.S. Federal Reserve—a cornerstone of global economic stability—is threatened by political whims. That’s the alarming reality as former President Donald Trump’s attempts to influence the Fed have sparked serious warnings from Christine Lagarde, the head of the European Central Bank.

Lagarde didn't mince words when she pointed out the potential fallout of Trump’s interference. She described it as a “very serious danger” not just for the U.S. economy, but for the global economy as well. In her interview with French broadcaster Radio Classique, she expressed deep concern over Trump’s threats to remove key figures within the Fed, particularly Chair Jerome Powell and Governor Lisa Cook.

“If U.S. 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,” Lagarde cautioned. Her comments underscore the immense power wielded by the Fed and the ripple effect its decisions have across the globe.

Trump’s criticism of Powell has been vocal and persistent, centered around the belief that the Fed isn’t doing enough to cut interest rates. His contentious relationship with Fed officials is underscored by his attempts to remove Cook, who is currently appealing her potential dismissal in a case that could escalate all the way to the U.S. Supreme Court.

In a dramatic revelation, Cook discovered she might be removed through a social media post rather than any formal notification. Her legal team argues that firing her without proper cause—a requirement for Fed governors—would set a dangerous precedent. Cook's term extends until 2038, making her potential dismissal not just alarming, but also politically charged.

Leading economists and investors have voiced strong concerns that any political interference could severely undermine the credibility of the Fed, jeopardizing its effectiveness in managing inflation. This comes at a time when U.S. government borrowing costs are on the rise, fueled by fears over the implications of Trump’s tariff policies and growing uncertainties surrounding Fed independence.

Lagarde emphasized the importance of stability, pointing out that it would be “very difficult” for Trump to take control of Fed decision-making on interest rates. She stressed that the U.S. Supreme Court has set a clear standard, indicating that a Fed governor can only be dismissed in cases of gross misconduct—a bar that Trump’s actions may not meet.

The situation has gained further complexity with the backing of Liz Truss, the former British Prime Minister, who famously served a brief stint before resigning amid financial turmoil. Her support of Trump’s stance only adds to the controversy, raising eyebrows across the financial world.