Central Banks


Further comments by Lagarde

  • This crisis is worse than the 2008-09 financial crisis
  • The ECB mandate is the same i.e. focus on price stability
  • We have to use instruments that provide the most proportionate response
  • “We knew we had more to do”, when talking about initial €750 billion PEPP launch
  • Needed to ensure that there was sufficient liquidity
  • Also needed to make sure that banks could continue lending to the economy
  • For once, monetary policy and fiscal policy worked hand in hand

There’s nothing new here in what she is saying mostly, as she is more or less just scratching the surface of things. The only interesting remark for me is that she admitted that the ECB knew they would have needed to add to PEPP stimulus upon the initial €750 billion launch. I reckon to some extent that is true, but they were probably just rushing out something to ‘close the spreads’ at the time.

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