Christine Lagarde has taken the helm at the European Central Bank from the highly regarded yet somewhat controversial Mario Draghi at the beginning of November. While many view Draghi’s leadership as forcing the ECB to the limits of monetary policy, he was successful in maintaining the monetary union and the single currency at several critical points in time over the past decade. Lagarde faces a formidable challenge inheriting a central bank that is divided in the direction of policy. Her legacy as a consensus builder may prove invaluable at this pivotal point in time. In her debut speech last week, she emphasized the need for stronger domestic demand and fiscal policy in order to counter the evolving global trade balance. If she is successful in convincing countries with budget surpluses to spend and invest through fiscal stimulus, the region may see stronger economic activity and a firmer Euro which has been in a downtrend versus the US Dollar since the financial crisis. The world needs a stronger, more resilient Europe and we believe Christine Lagarde will be an ideal leader of the ECB. [chart courtesy Bloomberg LP © 2019]
