Wed, Dec 04, 2019 - Page 10 News List

Eurozone growth is weak, stimulus helping: Lagarde

AP, FRANKFURT, Germany

European Central Bank (ECB) President Christine Lagarde on Monday said that economic growth “remains weak” in the 19 countries that use the euro, but gave no indication she is contemplating adding to the stimulus enacted by her predecessor, Mario Draghi.

Lagarde said in her first regular appearance before the European Parliament that manufacturing companies were hardest hit by a “sluggish and uncertain” global economy that lowers demand for goods from eurozone companies.

However, services companies were helping support growth and employment, she added.

She took over from Draghi on Nov. 1, after the bank decided in September to cut its main interest rate and restart a bond-buying stimulus program.

The eurozone economy grew only 0.2 percent in the third quarter.

Lagarde said that the ECB has “the tools to respond in case the situation does not improve,” but largely confined her remarks on the monetary stance to describing existing measures.

The bank committed to purchasing 20 billion euros (US$22 billion) in government and corporate bonds each month, a measure that pumps newly printed money into the economy in hopes of easing longer-term credit to companies.

The ECB also cut the rate on deposits from commercial banks to minus-0.5 percent from minus-0.4 percent, aiming to push them to lend excess cash.

Draghi’s package of stimulus measures might have given Lagarde a period of respite in her first months in office, analysts say.

The Sept. 12 decision was marked by disagreements over the bond purchases among an unusually vocal minority of officials on the 25-member governing council — a difference in policy views that Lagarde will have to manage as president.

She is to preside over her first policy meeting on Dec. 12.

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