Trump second term in White house?: ECB chief Lagarde sounds word of caution

European Central Bank President Christine Lagarde was able to observe the first Donald Trump presidency up close in Washington when she was running the International Monetary Fund, which perhaps is why she’s been fearless warning about the dangers of a second one. She can be playful but also dead serious.

When Bloomberg Television’s Francine Lacqua asked her in Davos about the upcoming US election, Lagarde made the audience laugh by promptly lifting her cup and saying: “Yeah, let me have some coffee.”

But then she went on to explain just how tricky it will be for policymakers if Trump returns to power in 2025. “That of course it’s up to the American people to decide who will lead their country.”

“But obviously we are all concerned about it because the United States is the largest economy, the largest defense country in the world and has been a beacon of democracy, will all its upside and downside,” she said. “We have to be extremely attentive and anticipate — just as we do with inflation.”

She said all the “what-if scenarios need to be considered and that Europe should stand strong and not assume it can rely on presumed friends around the world because that can change.”

Polls show November elections in the US shaping up to be a rematch between Trump and President Joe Biden, who defeated him in a bitterly fought 2020 contest.

Lagarde, who has headed the ECB since November 2019, has been a critic of Trump before, but her latest remarks are the most vocal in her current role. Moreover, central bankers usually go to lengths to avoid commenting on politics.

Back in 2016, when she was chief of the IMF and Trump was a presidential candidate, she highlighted the economic risks of tar-iffs, one of his key policies. Three years later, before leaving Washington for Frankfurt, she took another swipe at him, saying his trade war with China had dented global economic growth.