The US Federal Reserve losing its independence would pose a “serious danger” to the world, according to European Central Bank (ECB) President Christine Lagarde.
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But Lagarde told Radio Classique in an interview on Monday that US President Donald Trump would find it “very difficult” to take control of the US central bank, citing legal precedents that prevent the removal of Fed governors.
“If he did manage to do so, I think it would pose a very serious threat to the US economy and the global economy,” she said. “Monetary policy obviously has an impact on the US in terms of maintaining price stability and ensuring optimal employment in the country.”
Without autonomy, “I believe that the stability of the US economy and, consequently, the effects that this would have throughout the world – because it is the largest economy in the world – would be very worrying,” Lagarde said.
Trump has launched an unprecedented attack on the Fed, demanding it lower interest rates that he considers are far too high. As well as repeatedly berating Chair Jerome Powell, he’s moved to fire Governor Lisa Cook, who is fighting the dismissal in court.
Turning to Europe, Lagarde said the ECB, has achieved price stability and will do whatever is necessary to keep euro-area inflation in check.