European Central Bank President Christine Lagarde said Tuesday that he hoped that US President Donald Trump would fire Federal Reserve Chairman Jerome Powell not a table scenario.
Asked by CNBC’s Sara Eisen if Trump found a way to remove the central bank chief, Lagarde said, “I don’t hope it’s not a risk.”
Trump appointed Powell during his first presidential order, but is now considering whether the Fed chief can be legally fired before his term expires. Powell previously said he doesn’t believe the president could legally fire him.
Speaking about the bystanders at the IMF World Bank’s spring meeting, Lagarde told CNBC he would not comment on the market impact of the “hypothesis that we hope is not on the table.”
Trump has stepped up pressure on Powell to cut interest rates, warning that the US economy could slow down otherwise.
Powell last week suggested that Trump’s trade war could strain growth and fuel inflation. He had not expressed his expectations for the future interest rate channels, but said, “For the time being, we are well positioned to wait for more clarity before considering adjusting our policy stance.”
Lagarde told CNBC on Tuesday: “We are both used to political pressure in one way or another.
“I have great respect for the work he is doing, his loyalty to his work, and his hard work and training as much as possible to fulfill his duties. For him, I am sure that delegation is our compass.
The ECB and the Fed are divergent to monetary policy.
The euro area central banks consistently lower the rate as inflation closes to the 2% target, with bloc economic growth appearing inactive. Meanwhile, the Fed has stabilized this year after enacting three consecutive cuts between September and December last year.
The ECB cut interest rates by another 25 basis points last week, cutting its third and seventh trim in 2025 since it began easing monetary policy last summer. In its monetary policy statement, the central bank warned of a weakening of growth outlook related to global trade uncertainty resulting from Trump’s tariff policies.
Trump cited the ECB rate reduction during his recent attack on Powell. On Monday, he posted on the Truth Social Platform. The central bank has already cut its fees seven times and once again branded Powell as “Mr. Two Late.”
Scope of EU-US trade negotiations
Lagarde also discussed the impact of the tariff policy that pisses offended in Trump’s market, saying that the tariff rates currently facing the Eurozone are higher than the 10% blanket currently levied on US trading partners, as it includes 25% operations for steel, aluminum and automobiles. The European Union could be slapped at a universal 25% tariff without trade.
“I’m sure there’s a scope of negotiation. I’d like to sit in the nature of policymakers and discuss their cases and point out their orders, their red lines, their vulnerabilities.
“I would be surprised if that wasn’t the case,” she added.
The EU has now suspended its first tranche on the counterleaf. This is a response to the metal rate and is engaged in consultation.
Lagarde said he opposed Trump’s view that the EU was unfairly treating the US because of its surplus of goods.
She said “there are a huge number of joint interests” between the US and Europe. “There may be sectors that require serious negotiations, but as always, it’s the same as trade…it’s not just one side, it’s on both sides.”
