France is not currently in a situation that would require the intervention of the International Monetary Fund (IMF), but any risk of a government falling in the eurozone is “worrying,” European Central Bank President Christine Lagarde said today.
Speaking on Radio Classique, Lagarde said that fiscal discipline remains imperative in France and that she is monitoring the French bond spread situation very closely.
French opposition parties have said they will bring down the minority government in the vote of confidence to be held next Monday, September 8, which was announced unexpectedly last week by Prime Minister François Bayrou because of his unpopular plans for fiscal austerity in 2026. Right now, all indications are that he will not get a vote of confidence and will have to resign.
This situation is hurting the stock market and the bond market in France, which is the second-largest economy in the eurozone.
“Countries are asking for IMF intervention in circumstances in which the current account is seriously in deficit and in which the country cannot meet its obligations: this is not currently the situation in France,” the ECB chief pointed out.
Christine Lagarde also said that if US President Donald Trump removes Jerome Powell from his position as chairman of the US Federal Reserve or that bank’s governor Liza Cook, it would pose a “very serious risk to the US economy and the world economy.”
In her interview with Radio Classique, Lagarde said: “If US monetary policy is no longer independent and instead depends on the dictates of this person or that person, then I think the impact on the balance of the US economy could, as a result of the impact that this would have on the world, be very worrying because it is the largest economy in the world.”
Trump has repeatedly attacked Fed Chairman Jerome Powell for not cutting interest rates and has threatened to fire him. Trump is also trying to fire central bank governor Liza Cook.
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