Yesterday Christine Lagarde made her debut appearance as President at the European Parliament. She said the European Central Bank will be ‘resolute’ in restoring eurozone price stability under her presidency, while stressing that an upcoming strategy review will be wide-ranging, including climate change and inflation.
Lagarde acknowledged the side effects of the ECB’s ultra-loose policy. She said the review will try to gain a better understanding of how longer-term trends affect what the Central Bank can control. She said inflation has yet to return to the goal of ‘below, but close to, 2%’ despite years of pumping liquidity into the financial system. The ECB itself has become increasingly concerned that its policies might threaten financial stability.