Lagarde to continue low interest rate policy – for now
This week, Christine Lagarde, the future head of the ECB, spoke out in favour of continuing the low interest rate policy of her predecessor Mario Draghi. She told the Economic and Monetary Affairs Committee of the European Parliament on Wednesday that the euro zone economy faces some risks in the short term. One reason is the inflation, which remains below target level.
On the other hand, she claimed that the ECB will be undertaking a broader strategy review under her leadership. “2003 was a long time ago and many things have changed as far as the ECB is concerned,” she said. “My strong belief is that the cost-benefit analysis (of policy) and possibly a review of the monetary framework that would have to be conducted, not just by the ECB, but also in coordination with other central bank institutions from around the world, is warranted, given the circumstances.”
Lagarde also explained that the ECB’s role in combating climate change will grow. “My personal view is that any institution has to actually have climate change risk and protection of the environment at the core of their understanding of their mission,” she said in Brussels. “Primary mandate is price stability, of course. But it has to be embedded that climate change and environmental risk are mission-critical.” Reuters