‘Neither hawk nor dovish’, Christine Lagarde puts her ECB duties under academy management

In her first press conference, ECB president laments “weak” growth and says she supports Emmanuel Macron’s reforms

Lagarde finished reading her analysis of the economic situation in a monotonous, slightly tense tone, stammering, before returning to her usual composure, warning with a smile: “Every president has his own style. I know you want to compare, but I’ll have my own style.»

In her first press conference as president of the European Central Bank (ECB) on Thursday 12 December, Ms Lagarde attempted to gently turn the page on Mario Draghi. After eight years as head of monetary policy in the Old Continent, his predecessor’s departure at the end of October caused sharp divisions: On the one hand, his fans (mostly) applauded his decisive action that made it possible to save the 2012 crisis A unique currency for the period; on the other hand, critics, especially in Germany, worry that increasingly negative interest rates will hurt citizens’ savings. The German tabloid Bild even called him “Count Draghira”.

Ms Lagarde is trying to start her mission in a more collegial fashion. “I am neither a hawk nor a dove. My ambition is to be an owl, an animal that is often associated with a little wisdom. I am not full of vanity, but I will try to get the most out of my board, and use these tools in the most desirable way possible.»

Price stability will remain central to ECB goals.​
For now, the good words are easy to apply: Unsurprisingly, the European Central Bank decided on Thursday not to change its monetary policy. Mr Draghi had cleared his sights before he left, proposing a series of stimulus measures in September: cutting the deposit rate to -0.5% and restarting the asset purchase programme (” quantitative easing”).

The new president doesn’t get into the hard points of the subject, but outlines a “strategic review” that she will launch during her term. While price stability, as defined in the Treaty on the Functioning of the European Union, will clearly remain at the heart of the ECB’s goals, the way it achieves it may change.

The current strategy, defined in 2003, is to keep inflation “close to but below 2 percent”. This definition, which began at a time when the financial crisis had not yet occurred and deflation seemed unimaginable, is now outdated. “It’s time to revise it,” Ms Lagarde said. To avoid tying hands early, she warned that there is “no pre-determined landing zone” for the strategic reflection, which will come to a conclusion by the end of 2020.

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