Lagarde: Trump’s Fed Threats Pose Major Risk to Global Economy as France Faces Political Tensions
European Central Bank (ECB) President Christine Lagarde warned on Monday that any attempt to dismiss U.S. Federal Reserve officials would represent a “serious risk to both the U.S. and the global economy.”
Lagarde stressed that the independence of U.S. monetary policy is crucial for maintaining stability in the world’s largest economy. She cautioned that if the Fed were to operate under political influence, the repercussions on global markets could be highly disruptive. Her remarks followed intensified criticism from President Donald Trump, who has repeatedly attacked Fed Chair Jerome Powell for not lowering short-term interest rates and has also sought the dismissal of Fed Governor Lisa Cook.
Turning to Europe, Lagarde said France is not in a situation that requires International Monetary Fund (IMF) assistance, but she warned that any risk of government collapse within the euro area is “concerning.” She emphasized that fiscal discipline remains essential in France, while noting growing pressure in the country’s bond market.
The warning comes as France faces heightened political uncertainty. Opposition parties have vowed to topple the minority government in a no-confidence vote scheduled for September 8, after Prime Minister François Bayrou announced unpopular budget-cutting plans for 2026. The political tension has already weighed on French stocks and bonds, adding further strain to the eurozone’s second-largest economy.
Lagarde’s remarks highlight dual concerns: Trump’s threats to the Fed’s independence could destabilize the global economy, while mounting political risks in France threaten the stability of the eurozone. Together, these developments underscore the fragile balance of the international economic landscape.
