Draghi sets stage for Lagarde as new ECB chief | 2019-07-22

Draghi sets stage for Lagarde as new ECB chief

22 July, 2019 12:00 AM printer

LONDON: Mario Draghi is entering the final three months of his European Central Bank presidency with a plan that will see his influence linger well after he’s replaced by Christine Lagarde.

The ECB chief will this week lead a policy meeting that’s widely expected to set the stage for a September interest-rate cut and a possible resumption of quantitative easing. His staff have also started work on a potential revamp of the inflation goal in a move that could make it easier to pursue monetary stimulus for longer, report agencies.

It’s a bold strategy at the end of a term that has been defined by radical measures, and it could tie Lagarde’s hands well into her own eight-year tenure. Yet with inflation persistently below the ECB’s target despite years of massive stimulus, and with the economy now stuttering once again, Mr Draghi is likely to have her tacit endorsement.

“Draghi is trying to make sure that everything is in place for Lagarde when she comes in and to protect her from spending too much political capital too early,” said Axa chief economist Gilles Moec, a former Bank of France official. “It’s a case of taking one for the team in a way.”