FRANKFURT: Mario Draghi took over as head of the European Central Bank eight years ago amid market speculation that the euro currency union might break up.
Christine Lagarde succeeds him with a little more breathing room — but facing serious challenges from a weak economy, policy differences among her own officials, and questions about how much more central banks can do to help.
Analysts do not expect Lagarde to announce any changes in the bank’s interest rates and bond-purchase stimulus program when she holds her first rate-setting meeting and news conference on Thursday.
The bank enacted a stimulus package in September to nudge the economy along in the face of headwinds like the US-China trade conflict and Britain’s departure from the European Union.
It’s the first chance to hear how Lagarde communicates with markets and the public, a chief task for the head of an institution that affects the lives of 342 million people. That is not an easy task; the bank’s policy to keep one of its key interest rates below zero has come under criticism from Germany news media as penalising savers, while any imprecise remark from Lagarde can set off big market movements.
Lagarde may err on the side of caution and continuity” at first, said Frederik Ducrozet, senior European economist at Pictet Wealth Management.
That would be a contrast to Draghi’s first meeting in 2011 when the bank cut interest rates during a debt crisis that threatened to break up the currency union.
Published in Dawn, December 11th, 2019