Lagarde will need to manage expectations carefully, HSBC economist Fabio Balboni warned, since ruling cuts out completely could drive up borrowing costs across the eurozone, including in France. “Many countries in Europe face tough fiscal challenges, especially France,” Balboni said. “They simply can’t afford” to spend more money just on interest payments. The situation Balboni describes is something economists call …
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US treasury secretary Scott Bessent has said the Federal Reserve is and should be independent but that it had “made a lot of mistakes”, as he defended Donald Trump’s right to fire the central bank governor Lisa Cook. The president has criticised the Fed and its chair, Jerome Powell, for months for not lowering interest rates. Independent central banks are …
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The head of the European Central Bank has warned that if President Donald Trump were to undermine the independence of the US Federal Reserve, it would represent a “very serious danger” to the global economy. Christine Lagarde said if the Fed was forced to respond to political diktats, it would have a “very worrying” impact on economic stability in the …
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Lagarde singled out Germany and Spain as examples. Germany’s GDP would be about 6 percent lower today without migrant labor, while Spain’s strong recovery also “owes much” to foreign workers, she said. Across the eurozone, employment has expanded by more than 4 percent since 2021, even as central bankers pushed through the steepest rate hikes in a generation. The ECB …
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