During an interview with the French radio station Radio Classique, Lagarde was asked what would happen if Trump were to seize control of US interest rate policy.
The ECB president said: “I think it would it would be a very serious danger for the US economy and the global economy.”
She added: “If that policy wasn’t independent any more, if it was dependent on political diktats from one person or another, then the balance of the US economy and consequently the impacts that has on the world as a whole, because it is the world’s largest economy, would be very worrying”.
However, she cautioned that it would be difficult in practice for Trump to take control.
The US Supreme Court, she pointed out, had already said a Fed governor could only be dismissed if they were guilty of gross misconduct.
With the Federal Reserve’s interest rate-setting committee consisting of seven governors, plus presidents of regional Reserve banks, it would be difficult in practice for Trump to engineer a majority, she suggested.
Although the Powell was appointed by the president during his first term, the two have rarely seen eye to eye. In July, Trump described Powell as a “numbskull” who prevented people in the US from being able to buy houses by keeping rates too high.
In August, he attempted to fire Cook, one of the Federal Reserve’s seven governors, claiming there was reason to believe she had made false statements on her mortgage. The move, which her lawyers said lacked any factual or legal basis, has been challenged in court.