Finance
Central bank independence is no obstacle to low rates, says ECB's Villeroy
Published by Global Banking and Finance Review
Posted on September 3, 2025
2 min readLast updated: January 22, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on September 3, 2025
2 min readLast updated: January 22, 2026
ECB's Villeroy states central bank independence is vital for low interest rates, countering political pressures from figures like Trump.
PARIS (Reuters) -Central bank independence does not stand in the way of low interest rates, French ECB policymaker Francois Villeroy de Galhau said on Wednesday, joining a growing chorus of central bankers defending the Federal Reserve against White House interference.
U.S. President Donald Trump is piling pressure on the Fed to cut interest rates, regularly discussing publicly the possibility of firing Chair Jerome Powell, whom he has called a "numbskull".
In addition to his attacks on Powell, Trump also attempted last month to fire Fed Governor Lisa Cook as part of his campaign to get the Fed to cut rates.
"Independence is not an obstacle to reasonably low interest rates: on the contrary, it is a prerequisite for them," Villeroy, who is also governor of the French central bank, said at a conference in Vienna.
He added that a central bank's independence from politicians allowed it to control inflation in the long term and anchor households and businesses' inflation expectations.
ECB President Christine Lagarde warned on Monday that there would be repercussions for the global economy if the Fed lost its independence from political influence given the size of the U.S. economy.
Bank of England Governor Andrew Bailey said on Wednesday he was "very concerned" about threats to the Fed's independence, describing it as a "very serious" issue.
(Reporting by Leigh Thomas, Editing by Alexandra Hudson)
Villeroy stated that central bank independence is not an obstacle to maintaining low interest rates; rather, it is a prerequisite for them.
According to Villeroy, a central bank's independence allows it to control inflation in the long term and helps anchor inflation expectations for households and businesses.
Lagarde warned that losing independence from political influence could have significant repercussions for the global economy, especially given the size of the U.S. economy.
Bailey expressed serious concerns about threats to the Fed's independence, indicating that it is a very serious issue for the financial system.
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