IMF says it won’t soften its suggestions to a Lagarde-led ECB

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Published: July 11, 2019 10:25:38 PM

In the review, the IMF said that the ECB “should consider further accommodative measures” if the inflation outlook deteriorates. It added that a deeper downturn may require fiscal support for the economy.

IMF, Lagarde, ECB, economy news, International Monetary FundA recent research study found that IMF advice may have been more influential at the ECB than other central banks, especially when it started moving toward unconventional monetary easing. (Reuters)

One of Christine Lagarde’s chief experts on the euro-area economy said the International Monetary Fund won’t treat the European Central Bank any differently under her leadership. Lagarde is pegged to leave the Washington-based fund to replace ECB President Mario Draghi after his term ends this October. The deputy director of the IMF’s European department said Thursday that his team will retain its independent and impartial view.

“Our own thinking, our own suggestions will not change with the change of power at the ECB,” Mahmood Pradhan said on a conference call for the publication of the IMF’s latest report on the euro area. He added that while Lagarde did present a summary of the conclusions at a meeting with finance ministers in June, she didn’t chair a board meeting on the report.

In the review, the IMF said that the ECB “should consider further accommodative measures” if the inflation outlook deteriorates. It added that a deeper downturn may require fiscal support for the economy.

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A recent research study found that IMF advice may have been more influential at the ECB than other central banks, especially when it started moving toward unconventional monetary easing. Pradhan also said that Lagarde’s stance at the ECB will likely be guided by the external environment, when asked about his expectations for her appointment.

“For any person taking over the presidency of the ECB, the primary factor will be the reality on the ground,” he said. “What is the outlook for inflation and what is appropriate policy response? Our Managing Director, Christine Lagarde, I have no doubt that she will pay equal attention to the ECB’s objective that we have seen from the current president.”

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