Eight years ago, Mario Draghi premiered at the ECB with a punch on the table. It had only been two days since his rise to the presidency, and the Italian surprised with the first of his many interest rate drops. Christine Lagarde has not wanted to emulate her predecessor. After chairing its first Governing Council on Thursday, the former head of the IMF has left everything just as its predecessor left it in September, when Draghi announced almost to the desperate end of his final measures with the hope of encouraging the economy and boosting some Prices that insist on not growing. Waiting for the tone that it adopts in the press conference after the meeting, the Frenchwoman prefers for now to wait and see.
The ECB of Lagarde starts with caution. It leaves the interest rates intact -0% for the reference, and a negative rate of 0.5% for banks that deposit funds in the coffers of the eurobank – and keeps the pace of bond purchases -20,000 million per month, susceptible to increase if things twist even more–.
No one really expected anything else from Thursday's meeting. Lagarde arrives at the ECB three months after Draghi promoted a battery of measures that cost him to take forward due to doubts about the negative rates, whose effects concern a growing number of people responsible for European monetary policy. And since then the situation has not worsened so much as to justify new monetary injections, nor has it improved so as to retrace the path traveled. "It is still early, but we believe that his style will be more like Trichet's than Draghi's, that is, he will devote himself more to building consensus than to forcing decisions," Pictet Wealth Management analysts summarize in a note.
Lagarde may seem calm, but he has an agenda full of thorny issues. First, because the eurozone has not just taken off. The ECB is far from getting inflation to be close to 2%. And doubts about the organism's ability to fulfill its sole objective make a dent in its credibility. The economy has also stagnated. And here Lagarde will insist on a message that both she and Draghi have been releasing for some time: the need for governments to get involved with an adequate spending policy, given that monetary policy is becoming less and less effective.
This is where the new head of the ECB collides with its first big dilemma: it has to convince investors that it still has tools to enforce the objective of price stability, but at the same time reminds governments that their room for maneuver It is very close to being exhausted, which the ECB practically no longer gives of itself.
Lagarde is also expected to give some clue as to the strategic review in which he has embarked on the organism where he has just landed, the first since 2003. It will be time to redefine the objective: do you keep it at "close but below 2%?" "?, Does it leave it in a simple 2%, as the majority of pigeons of the Governing Council claim? Or does it even make it more flexible to ensure compliance, as requested by hawks?
Another stone that the president has already hit is her very personal project to involve the ECB in the fight against climate change. Upon being chosen, Lagarde insisted on the need for the body to be involved in the possibly the great European and global challenge in the coming decades. His proposal, not yet finalized, has raised criticism among many central bankers, who recall the lack of democratic legitimacy of the body to interfere with political issues and move away from its mandate of price stability. Even more so when this mandate has not been fulfilled for many years. "That the central banks do not get distracted by the idea of saving the planet, and focus on their objective," said a few days ago the former ECB vice president, Vítor Constâncio.