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The chief of the European Central Bank yesterday sounded the alarm over Donald Trump’s war on the US Federal Reserve Christine Lagarde said the US President’s attacks posed ‘a very serious danger’ for the global economy.
Trump has repeatedly criticized the Fed’s chairman Jerome Powell, describing him as a ‘numbskull’ and ‘stupid person’ for not cutting interest rates, and has publicly flirted with the idea of firing him.
Last week, he tried to sack Lisa Cook, a member of the Fed’s board of governors. The attacks have rattled financial markets and, together with fears over Trump’s erratic trade policy, left the dollar 10 per cent lower so far this year against a basket of currencies.
And yesterday, Lagarde intervened to warn of the dangers of the US President’s intervention. ‘If US monetary policy were no longer independent and instead dependent on the dictates of this or that person, then I believe 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 told French station Radio Classique. ‘It is the largest economy in the world.’
Lagarde also said that a ruling on Friday by a US appeals court stating that most of Trump’s tariffs were illegal were adding a ‘further layer of uncertainty’ to the global economic outlook.
In the same interview, she warned of the ‘worrying’ risks facing France as its government nears collapse.
Prime Minister Francois Bayrou has called a confidence vote for next week, which he is expected to lose, creating fresh chaos after predecessor Michel Barnier was toppled in December.
It will leave President Emmanuel Macron the choice of appointing a new government or calling elections. Markets have responded by selling French debt, driving bond yields higher. Lagarde added: ‘All risks of government collapse in any eurozone country are worrying.’
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