Does Mario Draghi make the start easier for Mrs. Lagarde?

Christine Lagarde is likely to become the new head of the ECB in early November. It is generally expected that she will continue or even expand Mario Draghi’s loose monetary policy. Wouldn’t it make more sense if Mario Draghi did some of this work for her quickly?

Because if Draghi in his last days in office again takes up new bond purchases etc, what would he have to lose? Nothing. And Christine Lagarde could start with a new purchase program, which comes from her predecessor. And exactly this scenario seems to become reality. According to SPON, Mario Draghi plans to start new bond purchases “by November”. So exactly until the moment Lagarde takes office.

Mario Draghi is also supposed to plan to change the official inflation target of the ECB until the end of his term in office. So far it has been “2% or close to 2%”. In the future it should only be “2%”. So an upward correction of the target, perhaps 0.2% or 0.3%? It would be an ideal scenario for Christine Lagarde. She wouldn’t have to put up with annoying questions about why she started buying bonds. Because that would be “to blame” on her predecessor. According to reports, Mario Draghi is also thinking about installing a “symmetrical inflation target”. Thus, inflation could also be above 2% for a while, so that after a weak price phase a sustained strong price growth could develop the other way round.

Mario Draghi and Christine Lagarde in June. Photo: ECB

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