FRANKFURT (Reuters) – European Central Bank President Christine Lagarde is set to launch a broad review of its policy on Thursday that is likely to see her redefine the ECB’s main goal and how to achieve it.
The euro zone’s central bank has fallen short of its inflation target of just under 2% for years despite increasingly aggressive stimulus measures under Lagarde’s predecessor, Mario Draghi.
ECB rate-setters are not expected to make any policy change this week but simply stand by their pledge to keep buying bonds and, if needed, cut interest rates until price growth in the euro zone heads back to their goal.
Lagarde will, however, announce the start and scope of the ECB’s first strategic review since 2003, which will last for most of the year and span topics from the inflation target to digital money and the fight against climate change.
Investors will be looking for clues to whether the review will see Lagarde cement her predecessor’s legacy of monetary largesse, or if she will use it to acknowledge worries that years of easy credit have fueled financial bubbles.
“(Thursday’s) meeting will be important in assessing whether the aim of reconsidering the inflation target has retained the dovish motivation focus that Draghi had tried to give it,” said Greg Fuzesi, an economist at JP Morgan.
The ECB will announce its monetary policy decision at 1245 GMT and Lagarde will hold her second news conference as the central bank’s chief from 1330 GMT.
