New ECB Chief Holds 1st Rate Meeting 12/12 06:35
FRANKFURT, Germany (AP) -- Newly appointed European Central Bank head
Christine Lagarde makes her first official assessment Thursday of the mixed bag
that is the eurozone economy, which suffers from slowing manufacturing and
global trade even as consumer spending helps prop up growth.
Analysts think Lagarde will stress that the economy still needs support from
the central bank, and that policymakers must be their guard against things
turning out worse than expected. The ECB, however, is not expected to announce
changes to a stimulus package decided Sept. 12 before Lagarde succeeded Mario
Draghi on Nov. 1.
Doubts have grown about how much good additional central bank action can do
to support developed economies; the U.S. Federal Reserve on Wednesday kept
interest rates unchanged and signaled it would leave them alone through 2020.
Instead, interest is focused on Lagarde, who is presiding over her first
meeting since she was appointed by European leaders as the head of the
institution that sets monetary policy for the 19 euro countries that use the
euro and their 342 million people. She is well known from her previous jobs as
head of the International Monetary Fund and as French finance minister but
investors will want to see how she communicates and explains the complexities
of monetary policy to markets and voters.
Other themes that may come to the fore at her news conference are her plans
for a review of the bank's monetary policy framework and how it defines price
stability, the goal it is supposed to seek under the European Union treaty.
There's also been discussion of whether the ECB should do more to support
financing of projects aimed at fighting environmental pollution and climate
Analysts will also look for signals on how she will manage dissent on the
ECB's 25-member governing council. A minority criticized the measures enacted
under predecessor Draghi on Sept. 12. Those included a cut in the deposit rate
to minus 0.5% from minus 0.4%. The rate is charged on excess cash left at the
central bank overnight by commercial banks, so the negative rate is in effect a
penalty that aims to push banks to lend the money to companies. The bank also
started 20 billion euros ($22 billion) in monthly purchases of government and