ECB’s Lagarde Seems Too Relaxed for Me. She’s Wrong! - Forex News by FX Leaders

ECB’s Lagarde Seems Too Relaxed for Me. She’s Wrong!

Posted Thursday, March 12, 2020 by
Skerdian Meta • 1 min read

The European Central Bank (ECB) held its meeting a while ago. There were no expectations for a rate cut, but they could have as well delivered a surprise cut, like most other major banks have done. They didn’t but, Christine Lagarde speech sounded sort of worried today, but not as much as she should be. Although, they increased the stimulus measures. She made the following comments in her statement, following the rate decision from the ECB:

  • The virus is a major shock
  • Virus will slow down production and reduce demand
  • Calls for help from fiscal authorities
  • Ambitions, coordinated fiscal policy response needed
  • ECB measures will help smooth provision of credit
  • ECB stands ready to adjust all instruments
  • Latest indicators suggest considerably worse outlook
  • Necessary containment measures are adversely affecting activity
  • Growth moderated before the virus outbreak in manufacturing
  • Growth expected to regain traction in medium-term
  • Sees 2020 growth at 0.8% vs 1.1% but numbers pre-date coronavirus
  • Risks skewed ‘clearly’ to the downside for 2020 notably and also for 2021
  • Sees 2021 growth at 1.3% vs 1.4% prior
  • 1.4% in 2022 vs 1.4% prior
Yes, she dares to make predictions right now, Really? Issuing GDP forecasts right now is so embarrassing. Just say you’re going to update them when they know more about the virus. We all know that the economy will just dive in the coming months, just like the Italian GDP which should contract considerably this month.
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