Christine Lagarde: “I plan to finish my term, the markets are paying attention” | Economy | EUROtoday

The president of the European Central Bank, Christine Lagarde, has no intention of leaving earlier than the top of her time period. “I really think about it.” [acabar el mandato] and I believe the markets are taking note of this,” the Frenchwoman responded to a direct question from MEPs in an appearance before the European Parliament. Lagarde has thus confirmed that she will not leave the helm of the highest monetary authority in the area before October 2027, when the period for which she was elected ends.

Not even a week ago when speculation about a possible early departure of Lagarde was triggered after the British newspaper Financial Times published that it was considering this possibility. Since then, the Frenchwoman has twice come out against these rumors. The first on Thursday night (early morning on Friday in Spain) in the American newspaper The Wall Street Journalcompetition of Financial Times and also very followed by investors and markets. Two days later he reiterated it in an interview on American television CBS. And this Thursday he did it in the European Parliament.

A German parliamentarian asked him about the matter, linking it to market confidence. His response has been forceful: “Are you asking me if I’m going to finish my mandate? Yes, I give it some thought. I actually give it some thought and I imagine that the markets are attentive to this. I’ve no doubts about this and we’ll proceed collectively. It is the Governing Council that makes the selections underneath my management, we’ll proceed within the mission now we have.”

Indirectly, Lagarde had already suggested that she planned to end her mandate in the appearance before the Economy and Finance Commission of the European Parliament. He has done so when he has linked the deployment of the digital euro to his mandate. This project, which is advancing in the legislative and technological field, seeks to create a digital cash format and build an entirely European payment system. The forecast is that it will begin operating in 2028 or 2029, that is, even after the current president of the ECB finishes her term.

Another of the issues that Lagarde has touched on before MEPs is, logically, inflation. “Despite the truth that inflation has fallen, surveys present that many voters nonetheless understand that costs are rising sooner than the info suggests,” admitted the Frenchwoman, who added: “This distinction between measured and perceived inflation will not be a mere statistical curiosity, however relatively a historic and world regularity. In addition, it has implications for financial choices and for belief in establishments, belief that helps to strengthen inflation expectations.”

As explained by the president of the ECB, this phenomenon has implications that go beyond perception because it ends up affecting the behavior of the population both in what they spend and what they save and in this way it is transmitted to economic activity and inflation. Psychology also plays a role, he highlighted: “People tend to focus more on price increases than on decreases of equal magnitude, which can cause an upward bias in inflation.”

For the ECB, this is important because of its impact on the economy, of course, but also because it generates distrust in the institutions. And this, Lagarde told MEPs, is not something that affects only the central bank and its task on inflation: “It is a shared job. Its position is to channel their issues and act as a bridge between the ECB and the folks we serve. Our position is to give attention to fulfilling our mandate and explaining not solely what we do, but in addition why and the way we do it, and to do it in a approach that’s simple to know.”