Ferdinando Giugliano, Columnist

Lagarde’s Cautious Optimism Was Too Optimistic

The ECB president's ever-so-slight shift in tone isn't welcome in a world used to Mario Draghi's steady forward guidance.

January 31, 2020 at 12:20 PM UTC

By Ferdinando Giugliano

Ferdinando Giugliano is a former Bloomberg Opinion columnist. He was previously a member of the editorial board of the Financial Times.

Overexuberant?
Photographer: Simon Dawson/Bloomberg

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Christine Lagarde sounded mildly optimistic as she talked about the euro region’s economy last week. Friday’s disappointing data gives her a reality check. The situation remains fragile and the European Central Bank is still far from its inflation target. The newly installed ECB president would be wise to return to her earlier caution.

The monetary union expanded by a mere 0.1% quarter-on-quarter at the end of last year, which was slightly below estimates. The currency area only grew at a yearly rate of 1% in 2019, the slowest rate since 2013. France and Italy both shrunk in the fourth quarter, by 0.1% and 0.3% respectively. While Paris can blame one-off factors, including a wave of strikes, Rome really has no such excuse.