FRANKFURT MAIN: Christine Lagarde on Friday urged European countries to “innovate and invest” more to support growth at a time of global uncertainty, in her first major policy speech as president of the European Central Bank.
The ECB’s ultra-loose monetary policy would “achieve its goal faster and with fewer side effects” if euro area governments supported it with fiscal policy, Lagarde told a banking conference in Frankfurt.
The eurozone economy is expected to grow just 1.1 per cent this year - “much lower than previously forecast”, she said, as “trade tensions and geopolitical uncertainties” take their toll.
“Europe needs to innovate and invest to respond to these challenges and preserve its competitiveness in the longer run,” said Lagarde, whose previous job was head of the International Monetary Fund. She called for an investment drive across the 19-nation currency bloc that should be “more productive, more digital and greener”.
The speech by Lagarde, who took on her new role as the ECB’s first female chief at the start of the month, was highly anticipated by markets keen for a hint of her future policy stance.
“For the time being, Lagarde meets the expectations that she could become the leading economic and political voice for Europe rather than quickly shaking up the ECB,” said ING Diba bank analyst Carsten Brzeski.
Lagarde’s comments echoed those by the Organisation for Economic Cooperation and Development (OECD) which had on Thursday likewise urged governments to loosen the purse strings.
Published in Dawn, November 23rd, 2019