Monetary policy – "Give us time" – Economy


Christine Lagarde, head of the European Central Bank for three weeks, explains to bankers in Frankfurt where to go.

Christine Lagarde wants to reconcile Germany with the European Central Bank. A good strategy is to show good will. Recently, the new head of the ECB promised that she would learn German. Now followed the implementation of the first lessons. "I am pleased to be here today," said the successor to Mario Draghi on Friday at the banking conference in Frankfurt. In German, with a charming accent. But the audience did not respond. As the former French Minister of Finance pushed a coquette-questioning "So?" What, in this context, was a "How was I?" may interpret. The bankers in the hall of the Old Opera liked it and finally clapped.

It was her first big appearance in Frankfurt, where she will spend much of her working life over the next eight years. First, the bad news for many zero-interest plagues in the country: For now, it remains in this loose monetary policy. Then the other message: The ECB will rethink its monetary policy strategy. "Give us time," said Lagarde, who recently asked her colleagues from the ECB Governing Council for an exploratory meeting outside Frankfurt, in a relaxed atmosphere and a stately atmosphere, as evidenced by a picture published by the ECB on social media.

Lagarde wants to bring the central bank's decision-making body back in line with its predecessor Draghi's recent decision to ease monetary policy. The ECB is in a dilemma: it makes the easiest monetary policy in its history, but it misses its target to raise the price level to close to two percent. The central bank set itself this mark in 2003 to have buffers down. Now you want to discuss whether the inflation target needs to be modified. Other central banks have similar problems: worldwide, inflation rates are falling.

Lagarde will deal with such strategic issues internally in the coming months. At the current time, the Frenchwoman wants to encourage. Europe, "the second largest economic area in the world," must again have "confidence" in its own strength. Moreover, the ECB can not do everything alone to stabilize the euro zone. Politics and business should be involved. Lagarde, like Draghi, has long been demanding investments by the economically strong euro states and Germany, for example. This proposal is known to be controversial in the federal government, but Lagarde might try to change that, with economic arguments and some charm. She spoke on Friday about her "friend, Federal Finance Minister Olaf Scholz (SPD)".

Lagarde's performance underlines that she wants to change a lot at the central bank, both internally and externally. Only three weeks in office, the ECB President perceives her role in the public noticeably different than Draghi, who usually retired quickly from large public rounds. Quite different Lagarde. The former head of the International Monetary Fund sat down again after her speech to follow a round of talks with the heads of major European banks. It was about how the institutions should deal with zero interest rates. Lagarde took notes with an interested expression on his face.

In between she wrote messages on her cell phone, which was in a red case. Even that has never been seen with Draghi: Lagarde gave hand signals to colleagues in the hall, little fingers and thumbs spread, one might just call.

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