Is the ECB Facing Its Coronavirus Moment?
Lagarde has an opportunity to set her own path for Europe's central bank and break with past inertia.
The coronavirus puts an end to Lagarde’s ECB honeymoon. So be it.
Photographer: Frederick Florin/AFP/Getty Images
Having flown largely below the radar of an increasingly polarized discussion on how to respond to the coronavirus, the European Central Bank will be on center stage when its governing council meets Thursday in Frankfurt. The meeting comes at a time when the economic and financial damage is severely aggravating what already were complicated policy challenges due to the Eurozone’s secularly weak growth and inflation dynamics, as well as limited policy flexibility.
It’s not so long ago (just over a month, to be exact) that conventional wisdom felt that Christine Lagarde would have time to heal divisions on the governing council, advance the ECB’s strategic review, and expand available policy tools. She had assumed the presidency from Mario Draghi in November with a preset policy path in place for the next six to nine months. This view has now gone as the region’s problems have accelerated and amplified.