European Central Bank President Christine Lagarde on Tuesday said she hoped that U.S. President Donald Trump would not fire Federal Reserve Chair Jerome Powell.
Asked by CNBC’s Sara Eisen if that scenario was a current material risk to markets, Lagarde said: “I certainly hope not … I hope that it is not a risk.”
Speaking on the sidelines of the IMF World Bank Spring Meetings, Lagarde told CNBC that she would not comment on the market implications of an event she hoped was “not on the table.”
Trump has been ramping up pressure on Powell to reduce interest rates, warning the U.S. economy could slow down otherwise.
Powell in turn last week suggested that Trump’s trade war could weigh on growth and fuel inflation. He did not indicate his expectations for the interest rate path ahead, but noted that “for the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.”
Trump appointed Powell during his first presidential mandate, but is now looking into whether the Fed chief can legally be sacked before his term expires.
Lagarde told CNBC on Tuesday: “We’re both used to political pressure in one way or the other.”
“I have immense respect for the work that he does, and for his loyalty to his job and to being as diligent, disciplined as possible to deliver on his mandate. For him, I think, I’m sure as it is for me, the mandate is our compass. We have to deliver on our mandate.”
The ECB and the Fed have been diverging on monetary policy.
The euro area’s central bank has consistently cut rates as inflation closes in on its 2% target and economic growth in the bloc appears lackluster. The Fed has meanwhile been keeping rates steady this year, after enacting three consecutive cuts between September and December last year.
The ECB last week cut interest rates by a further 25 basis points, making its third reduction of 2025 and its seventh trim since it began easing monetary policy last summer. In its monetary policy statement, the central bank warned of a weakened growth outlook linked to the global trade uncertainty stoked by U.S. President Donald Trump’s tariff policy.
Scope for EU-U.S. trade negotiation
Lagarde also discussed the impact of Trump’s market-rattling tariff policy, saying that the tariff rate currently faced by the euro zone was higher than the blanket 10% now imposed on U.S. trading partners since it included 25% duties on steel, aluminum and autos. The EU could be slapped with universal 25% tariffs without a deal.
“I am sure that there is scope for negotiations. It’s in the nature of policymakers to want to sit down and and argue their case and point out their imperatives, their red lines, their vulnerabilities, and I’m sure that there can be a dialog,” Lagarde said.
“I would be surprised if there was not such a thing,” she added.
The EU has currently paused its first tranche of counter-tariffs, a response to the rates on metals, while it engages in talks.
Lagarde said she disagreed with Trump’s view that the EU treats the U.S. unfairly on trade because of its goods surplus, noting that the relationship also spanned services and foreign direct investment.
“There is so much joint interest” between the U.S. and Europe, she said. “There might be sectors where serious negotiations need to be had, but it’s as always with trade … it’s not just in on one side, it’s on both sides.”
