The European Central Bank and the Federal Reserve have taken diverging paths on monetary policy, a contrast President Donald Trump highlighted in his latest criticism of Fed Chair Jerome Powell.

President of the European Central Bank (ECB) Christine Lagarde arrives for an Eurogroup Ministers meeting in the Europa, the EU Council headquarters on February 17, 2025 in Brussels, Belgium. (Photo by Thierry Monasse/Getty Images)

Prabhjote Gill·Stocktwits

Updated Jul 02, 2025 | 8:31 PM GMT-04

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European Central Bank (ECB) President Christine Lagarde said Tuesday that she hoped U.S. President Donald Trump would not move to dismiss Federal Reserve Chair Jerome Powell, warning against political interference in central banking.

“I certainly hope not … I hope that it is not a risk,” Lagarde told CNBC, when asked if Powell’s job security was a material risk to markets.

She declined to comment on market implications, stating only that she hoped the possibility was “not on the table.”

Speaking on the sidelines of the IMF-World Bank Spring Meetings in Washington, Lagarde’s remarks come amid growing concern over President Trump’s escalating criticism of Powell.

The President has repeatedly pressured the Fed to cut rates, arguing that tighter monetary policy risks slowing the U.S. economy.

Trump has drawn a contrast between the Federal Reserve and the ECB, which last week cut interest rates by 25 basis points — its third reduction in 2025 and seventh since easing began in mid-2024.

The ECB’s policy statement cited weakening global growth tied to trade tensions and the tariff uncertainty sparked by Trump’s ‘reciprocal’ tariff policy.

However, Powell signaled a more cautious approach. He said the Fed is “well positioned to wait for greater clarity before considering any adjustments” and acknowledged that Trump’s trade actions could pressure both growth and inflation.

Trump referenced the ECB’s moves in a Monday Truth Social post, accusing Powell of acting too slowly. “They have already cut 7 times,” he wrote. “Mr. Too Late strikes again.”

Lagarde defended Powell’s independence stating, “We’re both used to political pressure.. I have immense respect for the work that he does … the mandate is our compass. We have to deliver on our mandate.”

U.S. markets recovered Tuesday afternoon following Monday’s losses. The Nasdaq-tracking Invesco QQQ Trust gained 3.3%, while the SPDR S&P 500 ETF and the SPDR Dow Jones Industrial Average ETF each advanced just under 3%.

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