With the end of Mario Draghi’s term as President of the European Central Bank, his successor Christine Lagarde finally had the chance to open a new chapter into the ECB’s history as the eurozone’s chief financial regulator. She did this by holding her first press conference as ECB President yesterday.
Lagarde, who was previously in charge of the International Monetary Fund, is widely regarded as another cautiously dovish policy maker. Investors expect to see a similar decision-making process within the ECB as seen under Draghi’s presidency. Because of this, we do not expect any U-turns in the policy of the European Central Bank.
During her press conference, Lagarde purposefully did not touch upon the bank’s stance on further monetary policy loosening. This is very much unlike what Mario Draghi used to do during such speeches, which often provided hints as to what to expect of the ECB.
Instead, Lagarde seems focused on encouraging more domestic spending. Rather than expanding the central bank’s balance sheet, she wants to see the more powerful and well-developed economies in Europe, namely Germany, France, and the Netherlands, come up with their own plans to promote growth on a national level.
In addition, Lagarde has to oversee the QE process that was restarted in November under Draghi’s leadership. The new round of stimulus is yet to produce results in economic reports coming from the eurozone.
