Published by Global Banking & Finance Review®
Posted on February 12, 2026
2 min readLast updated: February 12, 2026
Add as preferred source on GoogleBundesbank warns that losing Fed independence may boost global inflation, affecting central banks worldwide.
FRANKFURT, Feb 12 (Reuters) - A loss of independence at the U.S. Federal Reserve could raise political pressure on central banks all around the world and boost inflation for everyone, Bundesbank President Joachim Nagel said on Wednesday.
U.S. President Donald Trump has put relentless pressure on the Fed to cut interest rates and last month picked former Federal Reserve Governor Kevin Warsh to lead the bank from May, all in the hopes he would reduce the Fed's market footprint and lower borrowing costs.
"If this political pressure succeeds, it could be taken as a blueprint for politicians in other countries to pursue similar policies," Nagel said. "If that were to happen, inflation levels could increase all over the world."
While central bankers, including ECB chief Christine Lagarde and Bank of England Governor Andrew Bailey have welcomed Warsh's nomination, pressure on the Fed is expected to remain high, especially if the bank pauses policy easing until mid-year, as markets now expect.
Nagel said that the ECB's own independence is well protected but policymakers should not be overly complacent.
"Since the world economy is interconnected, political pressure in one country could make pursuing price stability more difficult for the Eurosystem as well," he said.
The ECB has been keeping inflation at its 2% target for nearly a year now, an enviable position as most major central banks are struggling to hit their own objective.
(Reporting by Balazs Koranyi; Editing by Toby Chopra)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
A central bank is a financial institution that manages a country's currency, money supply, and interest rates. It oversees monetary policy and aims to maintain economic stability.
Monetary policy refers to the actions taken by a central bank to control the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation and stabilizing currency.
Financial stability is a condition where the financial system operates effectively, with institutions able to withstand economic shocks, ensuring the smooth functioning of financial markets.
Economic growth is the increase in the production of goods and services in an economy over a period of time, typically measured by the rise in Gross Domestic Product (GDP).
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