New European Central Bank chief holds her first rate meeting

  • New European Central Bank chief holds her first rate meeting

New European Central Bank chief holds her first rate meeting

The European Central Bank hopes to have identified objectives for its taskforce on a digital currency by mid-2020, new ECB President Christine Lagarde said today, adding the bank should be "ahead of the curve" on the issue.

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.

Lagarde explained that the "core" of the review will be how to better fulfil the mandate of price stability, in particular, the goal of an inflation rate of below, but close to 2% over the medium term.

The ECB's policy decisions came just after the U.S. Federal Reserve chose to hold rates steady on Wednesday. The Governing Council expects them to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key European Central Bank interest rates.

Instead, interest is focused on Lagarde, who is presiding over her first meeting since she was appointed by European leaders as the head of the institution that sets monetary policy for the 19 euro countries that use the euro and their 342 million people.

The key item to watch was the language on inflation and that remains unchanged.

The ECB's first female president has also repeatedly stressed that monetary policy has a role to play in tackling the climate crisis, even if the real driver for change lies with fiscal policy.

Meanwhile, the US Federal Reserve left the interest rate unchanged on Wednesday night, which was clearly helped by the strong employment data released last week.

Doubts have grown among some economists about how much good more central bank stimulus can do to support developed economies. The ECB sees the eurozone growing only a modest 1.1 percent next year.

Draghi's final moves lowered the ECB's deposit rate to -0.5 percent, meaning banks have to pay more to park their excess cash at the ECB. It also promised low interest rates for an extended period and kept the pace of bond purchases, aimed at lowering borrowing costs, steady at 20 billion euros a month.