The newly appointed president of the European Central Bank and the former chief of the International Monetary Fund, Christine Lagarde, will be doing things her own way as president. This was a clear message from her to the investors and the media while she was talking to reporters on Thursday.
“I will have my own style,” she told reporters on Thursday. “Don’t over-interpret, don’t second guess, don’t cross reference. I am going to be myself and therefore probably different.”
She made this comment even as she chaired her first monetary policy decision in the capacity of the central bank of European Union.
The meeting resulted in the ECB folding the prevalent benchmark rates as had been expected by the market. The ECB also announced the continuation of its policy of purchasing of financial assets per month worth €20 billion ($22.3 billion) for “as long as necessary.”
Lagarde took over the reign of the ECB from predecessor Mario Draghi in November.
There was unprecedented internal dissent within the ECB after Draghi took a decision in September to restart the stimulus program, and the message from Lagarde was clear: she intends to rise above recent divisions at the central bank. At the time in September, there were number of hawkish members in the governing council of the bank who believed that the that the economic situation in the EU in September was not bad enough to warrant a stimulus package.
“I’m neither a dove nor a hawk,” Lagarde said. “My ambition is to be this owl.” Owls, she noted, are “associated with a little bit of wisdom.”
An inherent policy savvy-ness comes into the ECB along with Lagarde because she is a lawyer by training and not an economist, analysts have pointed out. During the global financial crisis, Lagarde was French finance minister. During her tenure at the International Monetary Fund, she developed deep connections in global finance.
There are also concerns about the residual monetary strategies remaining at the hands of the ECB because the interest rates are already at historic lows. Analysts say that Lagarde does not have much option at hand but to urge euro zone governments to increase their fiscal spending.
According to Lagarde, Europe’s economy still needs support even though it is showing signs of stabilization.
Om 2019, Europe’s economy will grow by 1.2%., expects the ECB which is an increase from the central bank’s earlier forecast of a growth rate of 1.1%. The bank also announced an expected growth of 1.1% for 2020 – down from an earlier estimate of 1.2%.
“Incoming economic data and survey information, while remaining weak overall, point to some stabilization in the slowdown in economic growth in the euro area,” Lagarde said. She noted that risks “remain titled to the downside but have become somewhat less pronounced.”
(Adapted from CNN.com)