Christine Lagarde Has Three Big Options
The ECB president can launch a new round of cheap bank loans to help SMEs, cut interest rates and beef up QE. She needs to lead from the front.
An uneasy start.
Photographer: FREDERICK FLORINChristine Lagarde has told euro-zone politicians that they must take action to stop the coronavirus outbreak from causing a repeat of the 2008 financial crisis. On Thursday, the president of the European Central Bank has a chance to show she can lead from the front.
Lagarde will announce how the ECB intends to combat the virus-caused economic slowdown. The list of possible measures includes a new round of ultra-cheap loans for banks; a cut to the central bank’s deposit rate that would push it deeper into negative territory; and the expansion of quantitative easing. Only a comprehensive package will show that the ECB is serious about protecting the economy and avoiding further disinflation.