ECB President Christine Lagarde issued a stark warning today, saying it would be “very worrying” if U.S. President Donald Trump succeeded in his efforts to exert control over the Fed.
In an interview with Radio Classique, Lagarde stressed “if US 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, because it is the largest economy in the world.”
Lagarde added that Friday’s U.S. appeals court ruling, which declared most of Trump’s tariffs illegal, created a “further layer of uncertainty” for the global economic outlook. The combination of policy unpredictability in Washington and structural risks elsewhere leaves investors wary at a time when global growth is already under strain from weak trade flows and tariff disputes.
Turning to domestic matters, Lagarde addressed mounting political risk in France ahead of the September 8 confidence vote. Opposition parties have pledged to bring down Prime Minister Francois Bayrou’s minority government over unpopular budget squeeze plans for 2026. The political drama has hit French bonds and equities, raising questions about the stability of the Eurozone’s second-largest economy.
Lagarde stressed, however, that France’s banking system is not at the root of the problem. She noted that banks are far better capitalised and structured than during the 2008 financial crisis, and remain responsibly managed. Still, she acknowledged that markets are sensitive to political shocks, and that uncertainty around government stability continues to weigh on risk sentiment.
