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Investors await first signs of Christine Lagarde’s ECB policy stance

By Lawrence Gash

Little immediate shift expected for Eurozone as former IMF chief takes over at central bank

Investors await first signs of Christine Lagardes ECB policy stance

Investors are awaiting the outcome of Christine Lagarde’s first meeting as president of the European Central Bank (ECB).

Although the new boss of the Eurozone's central bank is not expected to take any major decisions, commentators and investors throughout Europe and abroad will closely monitor the meeting for any points of difference between her and predecessor Mario Draghi.

On assuming her role, Lagarde announced a swift policy review, the ECB’s first since 2003.

High on her to-do list are reuniting the bank’s Governing Council, and healing the wounds from the controversial policy decision to reinstate quantitative easing (QE) in September

In recent speeches Lagarde has emphasised the negative side effects of the current policy stance — more than Draghi ever would have.

Lagarde, who was found guilty of negligence while head of the International Monetary Fund, has never been a central banker before.

In an interview last month with German weekly Die Ziet, she signalled her dissatisfaction with traditional monetary policy categories such as “dove” and “hawk”, who favour looser and tighter monetary policy respectively. “I hope I will be an owl," she said. "I like owls. They are very wise animals.”

Although no immediate policy changes are expected today, analysts will closely monitor the ECB’s economic outlook and inflation expectations. In particular the 2022 inflation forecast will be seen as a weathervane for Lagarde’s stance.

Further Reading: Mario Draghi bows out of ECB with rates unchanged

Further Reading: ECB urged to act together on inflation

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