Supporting Powell? Lagarde Warns Trump: Interfering with Central Bank Independence Will Have Severe Consequences

　　European Central Bank President Christine Lagarde warned U.S. President Donald Trump on Sunday that central bank independence is "crucial" and cautioned that any interference with its independence could lead to severe consequences. This comes as Trump attempts to influence the Federal Reserve's monetary policy.

　　Lagarde stated, "If a central bank loses its independence or if that independence is threatened, it becomes dysfunctional," which could lead to "instability, or even worse." She emphasized that independence is a prerequisite for a central bank to perform its duties effectively.

　　Lagarde's warning highlights growing international concerns that the political pressure faced by the Federal Reserve could evolve into broader economic risks.

　　Since returning to the White House in January this year, Trump has frequently criticized Federal Reserve Chairman Jerome Powell, accusing him of being too slow to cut interest rates. With the Fed keeping rates unchanged in several consecutive meetings, Trump has also launched an effort to undermine Powell's influence, hoping to see him leave the Fed soon.

　　Since Powell is not the only one setting U.S. interest rates, Trump is also seeking to reshape the Federal Reserve Board. He recently expanded his target by calling for the resignation of Fed Governor Lisa Cook, who has been accused by Trump's camp of falsifying documents to obtain a mortgage.

　　The minutes from the Fed's latest meeting show increasing concerns that Trump's tariffs on imported goods are driving up inflation, while the unemployment rate remains low—despite worries that the job market may be weakening.

　　Economists generally believe that central bank independence prevents politicians from cutting interest rates to cater to elections, as politicians may attempt to artificially create short-term booms in spending and economic growth, which could ultimately backfire in subsequent years due to soaring inflation.