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ECB to launch year-long strategy review in January – Lagarde

New European Central Bank chief Christine Lagarde today said the bank would next month launch a major “strategic review” of the bank’s tools and goals, its first since 2003.

Christine Lagarde told reporters the reassessment would start “in the course of January” and aim to be completed by “the end of 2020”.

The review “will turn over each and every stone”, she said, to address “major changes” that have taken place in recent years, including the challenges posed by climate change and technological advances.

Christine Lagarde vowed at her first press conference as ECB chief to keep to her “own style”, as she warned observers against second guessing her by comparing her statements to her predecessor Mario Draghi’s.

“Don’t overinterpret, don’t second guess, don’t cross reference, I’m going to be myself and therefore probably different,” she told journalists.

Ms Lagarde also said today that she does not favour one monetary stance over another, but simply aims to make sound decisions for the euro zone.

“Once and for all, I’m neither a dove nor a hawk, and my ambition is to be this owl, that is often associated with a little bit of wisdom,” said Lagarde. 

In central bank jargon, monetary doves are deemed more favourable to easing than the so-called hawks. 

The ECB’s regular monetary policy setting meeting is always closely watched but today’s is more tightly scrutinised than ever because Lagarde is the bank’s first boss who does not have a central bank pedigree.

Meanwhile, the European Central Bank today slightly lowered its euro zone growth forecast for 2020 to 1.1% from 1.2%, but sees output strengthening in the following two years. 

Growth is projected to reach 1.4% in 2021 and 2022, ECB chief Christine Lagarde said. 

Ms Lagarde also said that the European Central Bank is seeing the first encouraging signs that the euro zone growth slowdown is stabilising despite “persistent global uncertainties. 

“There are some initial signs of stabilisation in the growth slowdown,” Lagarde said. 

While manufacturing remained weak as trade tensions fester, the services and construction sectors remain “resilient”, she added.

Earlier, the European Central Bank left key monetary policy settings unchanged today – as expected.

As expected, the Frankfurt institution held the rate on its main refinancing operations at zero, on its marginal lending facility at 0.25%and its deposit facility rate at -0.5%. 

The governors also left the ECB’s massive bond-buying scheme untouched, having only in November restarted asset purchases to the tune of €20 billion a month. 

With a background in corporate law, Lagarde is the first ECB chief who is not a trained economist. But she is admired as an effective communicator.

Ms Lagarde herself has appealed for patience, saying she has been on a steep learning curve since taking up the job last month. 

“I am trying to learn German, but I am also trying to learn central bank language,” the one-time French finance minister told MEPs last week, acknowledging the market-moving impact of even a single ambiguous word.

In his final act as ECB chief, Mario Draghi in September unveiled fresh stimulus to bolster the euro zone, which has been weighed down by US-China trade tensions, Brexit uncertainty and a weakening manufacturing sector.

Faced with a slew of challenges, Christine Lagarde is expected to echo Draghi’s frequent call for euro zone governments to support the economy through fiscal policy.

Unlike her predecessor however, Lagarde has been outspoken about the bank’s possible role in tackling climate change, which she has described as “high priority”. 

That could range from building climate risks into the ECB’s economic models to greener investments. 

The first female president of the ECB has also said she wants to bring the bank closer to the public by ditching some of the jargon.

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