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WORLD NEWS Thursday 5 sepTember 2019

Lagarde defends ECB’s low rates as she prepares to take over

By DAVID McHUGH tral Bank’s extraordinary ECB beginning Nov. 1. etary issues “I want the of leaving it at the ECB -
Associated Press measures - such as bond Based in Frankfurt, Ger- people of the euro area to and a promise to purchase
FRANKFURT, Germany (AP) purchases and negative many, the ECB sets interest understand why decisions the bonds of countries fac-
— Incoming European interest rates, which have rate benchmarks and su- are being made.” ing excessive borrowing
Central Bank head Chris- costs.
tine Lagarde is defend- Some of those tools have
ing the bank’s record low faced criticism, in particular
rates and other stimulus from German news media
measures as she prepares and politicians. Some crit-
to take over with the econ- ics say they have led to low
omy facing trouble from returns for savers and that
trade wars and Brexit. stimulus has reduced the
During hearings in the Euro- incentive to reform finan-
pean parliament Wednes- cially shaky governments.
day, Lagarde said the job Draghi’s announcement of
requires both a commit- the bond-purchase prom-
ment to the basic man- ise in 2012 is credited with
date to keep prices stable defusing the debt crisis, so
and the “agility” to come much so that the backstop
up with new ways to meet was never actually used.
unforeseen trouble. The hearing preceded a
Lagarde, who has been vote by the full parliament
nominated by European on the nomination, though
governments to succeed the parliament cannot
Mario Draghi on Nov. 1, is block the nomination. In
preparing for the new job 2012 they voted against
at a time of heightened un- the appointment of Yves
certainty about the econ- Incoming President of the European Central Bank Christine Lagarde speaks to the European Mersch to the ECB’s top
omy, both in Europe and Parliament’s Economic and Monetary Affairs Committee in Brussels, Wednesday, Sept. 4, 2019. executive board to under-
around the world. Associated Press line their displeasure at the
She would take over just as lack of female candidates
Britain is scheduled to leave drawn criticism, especially pervises banks for the 19 EU Lagarde is not an econo- for top ECB posts. The euro-
the European Union. If that in Germany, for reducing member countries that use mist, although she is versed zone leaders made the ap-
happens without a divorce savers’ returns, among oth- the euro as a currency. Its in finance after serving as pointment anyway.
agreement to smooth er things. policies have wide-ranging French finance minister Analysts say the ECB could
trade, it could disrupt busi- The 63-year-old lawyer ar- impact on inflation, em- and head of the IMF. She add new stimulus measures
ness dealings between the gued that the measures ployment, business borrow- said that at the IMF she at its Sept. 12 meeting. La-
U.K. and the 27 remaining had helped create 11 mil- ing costs and the prices had asked staff to improve garde said she could not
members. Europe’s trade- lion new jobs since 2013 of assets such as stocks, communication by not us- comment on the upcom-
focused industries are fac- and eased financial tur- bonds, currencies and real ing confusing acronyms. ing meeting since she’s not
ing further turmoil from the moil. estate. The ECB’s ability to She praised the “agility” in office yet.q
U.S.-China trade conflict. Without such measures act swiftly set it apart from that led the bank under
U.S. President Donald Trump “the crisis would have been European Union leaders as Draghi to come up with
has imposed tariffs on Chi- a lot worse,” she said. the eurozone economy’s new tools to confront the
nese goods as he seeks to Lagarde said she agrees first line of defense during crisis over heavily indebt-
overhaul trade relations with the bank’s view that the debt crisis. ed governments and then
with Beijing; uncertainty the economy would need Lagarde said she would a period of low inflation
over tariffs has sideswiped monetary support “for an aim to communicate clear- that threatened to lead to
the 19-country eurozone extended period of time.” ly with the public to explain chronic economic stagna-
as businesses delay invest- Lagarde resigned from the the bank’s decisions. She tion. Those unusual tools
ments and new orders. IMF effective Sept. 12 after said that while “financial have included a negative
At her hearing in Brussels, European leaders nominat- market operators” were interest rate for deposits
Lagarde expressed sup- ed her for an eight-year, likely to understand the from banks - to push them
port for the European Cen- non-renewable term at the ECB’s message on mon- to lend the money instead