The President of the European Central Bank (ECB), Christine Lagarde, depicted on Monday 28 September an uncertain economic situation in the euro area, which is still in the grip of a pandemic, the extent of the socio-economic impact of which remains unknown.
Before the European Parliament’s Committee on Economic and Monetary Affairs, Ms Lagarde advocated, in the face of this situation, maintaining a very accommodating monetary policy, characterised by: – the provision of very cheap liquidity to the financial sector via the TLTRO III operation, which is taking advantage of the negative rates at the ECB’s counter; and – €1,300 billion PEPP operation for the massive repurchase of securities, particularly public securities, which has “flexibility” in its DNA. This policy has prevented the fragmentation of the financial sector, has an impact on all segments of the economy and effectively combats disinflation, she said.
However, price inflation in the euro area remains very low (-0.2% in August) and is likely to remain so for several months, rising to 1.0% in 2021, according to forecasts by the monetary institute in Frankfurt.
Asked by Sven Simon (EPP, Germany) about the collateral effects of monetary policy, Ms Lagarde said the net balance of the actions taken was largely positive, as such collateral effects on property markets and on keeping zombie businesses on life support were not observed at this stage.
Conversely, Jonás Fernández (S&D, Spain) asked her why the ECB was not taking further accommodating measures to help euro-area countries cope with the crisis. The President of the ECB recalled that the monetary institute was ready to reassess and “recalibrate” its policy at any time according to circumstances in order to respect its primary mandate of inflation close to, but below, 2%, while keeping in mind the imperative of proportionality of the measures adopted.
In response to a question from Luis Garicano (Renew Europe, Spain), the former IMF director said she was “not very concerned” that national central bank governors had “slightly different views” on the extent of the accommodations or the timing of their lifting. The important thing is to stay the course with discipline once a decision has been made, she added, defining herself as “consensus builder”.
On behalf of the Greens/EFA group, Dutchman Bas Eickhout asked Ms Lagarde whether TLTRO operations could contribute more to the EU’s 2050 climate neutrality target by applying the European taxonomy on sustainable finance (see EUROPE 12538/18). She replied that she is indeed ready to consider any proposal in the context of the monetary policy review.
Finally, on the transparency front, the ECB will henceforth publish the opinions of its internal Ethics Committee on cases of conflicts of interest which may arise from remunerated employment of former members of the Governing Council, the Executive Board and the Supervisory Committee. (Original version in French by Mathieu Bion)