With just less than a week before the ECB Head, Mario Draghi’s departure from the central bank, traders are looking at the new boss. If critics say that Draghi did not go out with a bang, he most certainly did not leave in silence.
Draghi strengthened his legacy in a conference last Thursday when he defended the ECB’s policies to the press and critics. The 72-year old head also justified the accommodative measures of the bank in September.
The European Council appointed the IMF ex-head, Christine Lagarde, for a non-renewable 8-year term. The 63-year-old lawyer focuses on gender equality, climate action, and jargon-free language in her term.
However, critics are also pressuring Lagarde to resolve the divisions and disagreements over Draghi’s last stimulus package.
Several challenges will test Lagarde once she takes the helm. Challenges include her background, the state of the eurozone, and the euro’s performance.
The French lawyer will have to make her way through the landscape of the ECB on November 1st, 2019. And with figures that show the weakest economic performance since 2013, things may get rough for Lagarde.
QE Infinity and Beyond
The ECB is about to renew its bond-buying program, also known as quantitative easing. This time, there is no specific date as to when it will end, thus, the QE infinity name.
Mario Draghi said in his last press conference that it was time to expand the bank’s fiscal policy. To save the euro and the bloc’s inflation growth, Draghi engineered negative rates, and the quantitative easing program.
The euro started the month with an uphill climb as it tried to recover its losses from September, the month where Draghi unleashed the QE. However, the slowing growth of the region and Brexit uncertainties capped euro gains in the latter half of the month.
And with the coming changes and adjustments in Lagarde’s term and Brexit news, traders expect the euro to make a comeback in the future.