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Saturday, December 03 2022

Lagarde takes charge as European Central Bank chief

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Frankfurt: Christine Lagarde on Friday took over as President of the European Central Bank (ECB), replacing Mario Draghi, and has already asked Germany and Holland to invest more to support economic growth.

A few days before officially taking up the role in Frankfurt, Lagarde said in an interview with French radio station RTL that Germany and other countries such as the Netherlands with budget surpluses have not made enough efforts to boost weak growth, Efe news reported.

Lagarde, the first woman to hold this position at the ECB, has come into the role at a time when the economy of the euro area is weakening, Germany could enter a technical recession and stagnate, uncertainty over Brexit and a trade conflict between the United States and China, which has already weakened global growth.

Lagarde said that countries that have “chronic budget surpluses like the Netherlands and Germany” should invest in infrastructure, education and innovation.

Marco Valli, director of macroeconomic research at UniCredit, said Lagarde will inherit a monetary policy that will be on “automatic pilot”.

He added that it will make it easier for her to focus her initial efforts on restoring unity within the Governing Council and preserve the ability of the ECB to act “quickly and courageously”.

Lagarde also spoke in an interview with German newspaper Der Spiegel, in which she said she wants to know the critical voices with low interest rates and learn German.

Formerly managing director of the International Monetary Fund, she announced that she will carry out a detailed review of all the measures that the ECB has recently approved.

“We will objectively analyse the benefits and risks of the different options. Mario Draghi had his style, I will have mine,” Lagarde said in the interview.

During Draghi’s presidency disputes within the ECB have intensified, as has been made public in recent months, and Lagarde has said that her intention is to overcome the deep division between central bankers.

At his farewell ceremony Draghi made it clear that the creation of 11 million jobs after the sovereign debt crisis in the euro area is much more important than achieving price stability with an inflation target defined as a somewhat close rate at 2 per cent.

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