European Central Bank (ECB) President Christine Lagarde has urged central banks across the world to strengthen their independence, warning that the real challenge today is no longer just securing autonomy but defending it under sustained political and economic pressure.
Speaking on Thursday at a conference of Francophone central bank governors in Phnom Penh, Cambodia, Lagarde said monetary authorities are operating in an environment where independence is increasingly being tested by governments, elections, and economic shocks.
“The question is no longer simply how to guarantee independence. It is how to protect it when it is put to the test,” she said.
She noted that central banks in advanced economies can draw lessons from emerging and developing economies, where monetary institutions have long operated in more volatile political environments and often under tighter constraints.
Lagarde’s remarks come amid growing global concern over political interference in monetary policy, particularly in the United States, where President Donald Trump has repeatedly criticised the Federal Reserve over interest rate decisions and policy direction.
The ECB president also pointed to historical lessons from the 1970s oil shock and stagflation period, arguing that countries with weaker central bank independence recorded higher and more persistent inflation, reinforcing the need to shield monetary policy from political cycles.
According to her, central banks must strike a balance between remaining close enough to governments to support public policy goals while maintaining sufficient autonomy to resist short-term political pressure.
“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,” she said.
Lagarde also cautioned that rising economic shocks and declining trust in institutions could weaken the credibility of central banks globally, warning that credibility becomes most critical when policy decisions are politically sensitive and economically costly.
Her comments add to a widening debate among global policymakers over how fiscal pressures, inflation shocks and rising public debt could reshape the boundaries of central bank independence in the years ahead.
