'Wise owl' Lagarde outlines broad European Central Bank review, pledges new style

Andrew Cummings
December 14, 2019

The review, the first since 2003 for the ECB, will be comprehensive and "leave no stone unturned", including addressing social changes, such as technological development, climate change and inequality in the economy in relation to the ECB's mission as a central bank and how it could better deliver its mandate, according to Lagarde.

European Central Bank head Christine Lagarde said that recent economic indicators are "weak overall" but "point to some stabilizing in the slowdown of of economic growth".

In a statement, the European Central Bank said it expects interest rates to remain at their present or lower levels until it has seen the inflation outlook converge robustly to a level sufficiently close to but below 2% within its projection horizon and such convergence has been reflected consistently in underlying inflation dynamics.

Caution like that led economist Carsten Brzeski at bank ING Germany to say that "for ECB watchers and financial market participants. learning how to read Christine Lagarde will take some time".

U.S. Federal Reserve chief Jerome Powell has also struck a much more consumer-friendly tone since taking over a year ago although markets only expect a minor change in how it defines its own inflation target.

The second most important event in the world of monetary policy with the potential for a significant impact on the global economy is today's European Central Bank meeting, the first one chaired by Christine Lagarde.

The ECB's first female president has also repeatedly stressed that monetary policy has a role to play in tackling the climate crisis, even if the real driver for change lies with fiscal policy. That has given Lagarde a respite period that she can use to conduct the review.

On 1 November net purchases were restarted under the Governing Council's asset purchase programme (APP) at a monthly pace of €20 billion.

Financial analysts see the European Central Bank on hold throughout next year, a view that was strengthened by the Fed signaling on Wednesday that it was unlikely to touch USA interest rates in 2020.

Interest rates on the marginal lending facility and the deposit facility remained unchanged at 0.00%, 0.25% and -0.50%, respectively.

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