Lagarde Warns of Global Risks if Fed Independence Undermined

European Central Bank President Christine Lagarde has cautioned that political interference in U.S. monetary policy could have far-reaching consequences for the world economy.

In remarks given on Monday, Lagarde said that President Donald Trump’s efforts to dismiss Federal Reserve officials—either Chair Jerome Powell or Governor Lisa Cook—would represent a “very serious danger.” She stressed that undermining the Fed’s autonomy would not only weaken the credibility of U.S. monetary policy but also destabilize international markets that rely on the predictability of American economic leadership.

Lagarde underscored that the Federal Reserve plays a central role in global finance, meaning any perception of political control over its decisions could erode trust, unsettle bond markets, and disrupt capital flows across economies.

The warning comes at a moment of heightened uncertainty. A U.S. appeals court recently invalidated most of Trump’s new tariffs, adding to policy confusion and leaving investors uneasy about Washington’s direction.

Economists have also echoed Lagarde’s concerns. In a recent survey conducted by the Financial Times, a large majority of experts across Europe and the United States argued that markets may be underestimating the risks tied to political pressure on the Fed. Many said that if independence is compromised, the central bank could shift away from inflation control toward short-term political goals such as lowering borrowing costs or boosting employment, potentially at the expense of price stability.

For Lagarde, the issue extends well beyond the U.S. borders. With global markets closely interconnected, any erosion of trust in the Federal Reserve could trigger volatility across currencies, equities, and sovereign debt, she said. Her warning highlights how political maneuvers in Washington are being watched carefully in Europe and beyond as September trading begins under tense conditions.