Christine Lagarde Calls for Stronger Protection of Central Bank Independence

European Central Bank President Christine Lagarde called for stronger safeguards to protect central bank independence, warning that the issue is no longer just about guaranteeing autonomy but defending it when tested.

Speaking at a conference in Cambodia, Lagarde noted that developed economies have much to learn from emerging markets, where central banks have long operated under challenging conditions. She pointed to 1970s stagflation as proof that independence is “crucial” — countries with less independent central banks faced higher inflation.

Her remarks come amid rising political pressure on monetary institutions. In the US, President Donald Trump has publicly attacked the Federal Reserve and launched a now‑dropped criminal investigation into former chair Jerome Powell. In Europe, ECB board member Isabel Schnabel recently warned of a “quiet erosion” of independence as high government debt could pressure lenders of last resort to keep rates low.

“To best serve the public interest, a central bank must be close enough to the state — but independent enough to resist the pressures of the moment,” Lagarde said. She added that credibility is hardest to keep precisely when monetary policy decisions are most politically fraught.

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