The president of the European Central Bank, Christine Lagarde, said Tuesday that she hoped that the president of the United States, Donald Trump, dismisses the president of the Federal Reserve, Jerome Powell, was not a scenario on the table.
Asked about CNBC’s demand if Trump finds a way to eliminate the head of the Central Bank was a material risk for the markets, Lagarde said: “I hope not … I hope it is not a risk.”
Trump appointed Powell duration of his first presidential mandate, but now he is investigating whether the Fed head can be legally fired before his mandate expires. Powell has previously said that he does not believe that the president can legally say goodbye.
Speaking apart from the IMF spring meetings of the World Bank, Lagarde told CNBC that he would not comment on the implications of the “hypothetical market that I hope are not on the table.”
Trump has been increasing the pressure on Powell to reduce interest rates, warning that the economy of the United States could reduce speed in another way.
Powell in turn last week suggested that Trump’s commercial war could weigh on fuel growth and inflation. He did not indicate his expectations for the path of the interest rate ahead, but pointed out that “for the moment, we are well positioned to expect greater clarity before the consultations to find a policy position.”
Lagarde told CNBC on Tuesday: “We are both accustomed to political pressure in one way or another.”
“I have immense respect for the work he does, and for his loyalty to his work and to be the most diligent, disciplined as possible to fulfill his mandate. For him, I think I am sure it is for me, the mandate is our compass.
The ECB and the Fed have been diverging in monetary policy.
The central bank of the euro area has constantly reduced rates as inflation closes in its objective and economic growth of 2% in the block seems mediocre. Meanwhile, the Fed has maintained stable rates this year, then and inacting three consecutive reductions between September and December last year.
Last week, it reduced interest rates in another 25 basic points, which makes its third reduction of 2025 and its seventh adjustment since it began to facilitate monetary policy last summer. In its monetary policy statement, the Central Bank warned of a weakening growth perspective linked to world commercial uncertainty fueled by Trump’s tariff policy.
Trump has cited the ECB rate reducing his recently attacks against Powell. On Monday, he published on his Truth social platform that the Central Bank had already reduced the rates seven times, and again described Powell “Mr. Too Late.”
Scope for the commercial negotiation of EU-US
Lagarde also discussed the impact of the tariff policy of so much Trump market, saying that the tariff rate faced by the euro zone was higher than the 10% blanket now imposed on US business partners, since it included 25% duties on theft, aluminum and cars. The European Union could be slapped with universal tariffs of 25% without an agreement.
“I am sure there is room for negotiations. It is in the nature of policy formulators wanting to sit and argue their case and point out their imperatives, their red lines, their vulnerabilities, and I am sure it can be a dialogue,” said Lagarde.
“I would be surprised if there was no such thing,” he added.
Currently, the EU has stopped its first section of Contrafuerte, an response to metal rates, while getting involved in conversations.
Lagarde said that it is not in Trump’s opinion that the EU is unfairly treats the United States in commerce because because the surplus, pointing out that the relationship also covered direct foreign services and investment.
“There is so much joint interest” between the United States and Europe, he said. “There may be sectors in which they must be serious negotiations, but it is as always with trade … it is not only on one side, it is on both sides.”