Christine Lagarde must shift ECB policy, German ruling party head says

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Published: July 7, 2019 7:38:38 PM

A spokesman for AKK, as she is widely known in Germany, later clarified her remarks to say she expects Lagarde to cautiously adjust policy as the ECB strives to achieve price stability so it can move away from ultra-low interest rates.

Lagarde, who currently heads the International Monetary Fund, was nominated earlier this week by the European Council to lead the ECB in Frankfurt. (Reuters photo)Lagarde, who currently heads the International Monetary Fund, was nominated earlier this week by the European Council to lead the ECB in Frankfurt. (Reuters photo)

The incoming European Central Bank chief Christine Lagarde should shift monetary policy to make it comply with the bank’s mandate, the head of Germany’s ruling Christian Democratic party said in an interview.

Annegret Kramp-Karrenbauer, who took over as CDU party chief from Angela Merkel last December, said she expected Lagarde to respect and uphold the ECB’s mandate for independence and an inflation target of around 2%.

“We currently have an inflation rate that is well below that,” Kramp-Karrenbauer told Bloomberg in Aix-en-Provence, France, on the sidelines of an economy conference. “This has a negative impact on wealth and savings and that is why I’m very convinced that there needs to be a certain accommodation and that Christine Lagarde together with her colleagues — she doesn’t decide alone — will set the right course.”

A spokesman for AKK, as she is widely known in Germany, later clarified her remarks to say she expects Lagarde to cautiously adjust policy as the ECB strives to achieve price stability so it can move away from ultra-low interest rates.

Lagarde, who currently heads the International Monetary Fund, was nominated earlier this week by the European Council to lead the ECB in Frankfurt.

EU governments are considering Bank of England Governor Mark Carney to replace Lagarde at the IMF, Bloomberg reported on Friday. While a Canadian by birth, Carney holds British and Irish passports, so his selection would technically preserve the seven-decade practice of a European running the Washington-based lender.

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