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Lagarde's ECB Keeps Policy Unchanged as Strategy Review Looms


Thursday, 12 December 2019 20:05 WIB

Bank Sentral Eropa ECBChristine Legarde


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The European Central Bank kept monetary stimulus unchanged at President Christine Lagarde’s first policy meeting, shifting the focus to when she’ll announce her review of the institution’s strategy for safeguarding theeuro-zone economy.

The ECB kept its deposit rate at a record-low minus 0.5%, and bond purchases at 20 billion euros ($22 billion) a month, sticking to a controversial package unveiled in September. Lagarde, who has said little on monetary policy since starting in November, will hold a press conference at 2:30 p.m. in Frankfurt.

The president could use her briefing to signal a start date for the first comprehensive evaluation of the ECB’s mission in 16 years. While that exercise will focus on whether the inflation goal needs to be adjusted, the Frenchwoman has made clear that she also wants to engage in broad topical issues such as fighting climate change.

That drive has already concerned some officials, who worry it’ll divert from their primary mandate of restoring price stability. Inflation has averaged just 1.2% so far in 2019, well short of the target of just below 2% -- despite years of unprecedented and often contentious stimulus under Lagarde’s predecessor, Mario Draghi.

As the first ECB head never to have worked at a central bank, Lagarde’s justification of the current measures is likely to be closely scrutinized by economists and investors. She’s spent her initial six weeks learning the ropes, addressing divisions between officials, and urging governments to help revive feeble growth.

Source : Bloomberg


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