The ECB’s Moves Make Sense, But Won’t Be Enough
Lagarde and her colleagues can’t do it all. The euro zone will be in serious trouble unless the EU’s leaders step up.
Whatever it takes?
Photographer: Alex Kraus/Bloomberg via Getty Images
If you think the Federal Reserve has problems in getting on top of inflation, spare a thought for the European Central Bank. On Thursday, President Christine Lagarde announced the ECB’s first interest-rate increase in 11 years — a bigger-than-expected rise of half a percentage point, bringing the policy rate from minus 0.5% to zero. She also introduced a forthcoming Transmission Protection Instrument, a debt-purchasing device meant to guard against “unwarranted, disorderly market dynamics.”
These measures, fine as far as they go, by no means guarantee an orderly return to economic stability.