Christine Lagarde urged patience for the European Central Bank (ECB) as it looks to pare back its now €8 trillion balance sheet in the face of galloping inflation, and asked viewers to imagine the damage to the economy had the central bank not intervened in such a large way during the Covid crisis.
“It will come, it will come, in due course, yeah,” responded an at least a modestly uncomfortable ECB President Christine Lagarde when presented with the sharp upward-and-to-the right graph of the central bank’s balance sheet, and asked how she plans to bring it down. “How,” again pressed the questioner. “In due course, it will come,” she assured.
The EU’s most recent report estimated inflation in the Euro area at 7.5% in April, up from 5.1% three months earlier and 1.6% a year prior.
Look at the “counterfactual,” argued Lagarde. Had the ECB not stepped in with an emergency package of asset purchases as the Covid lockdowns began, and massively boosted that program as the pandemic continued, the damage to EU economies would have been devastating.
Earlier in the interview, Lagarde had called crypto (Bitcoin included) worth nothing. Asked by an audience member if she owned digital assets, Lagarde said no, but allowed that her son had invested. As for his success, or lack thereof, Lagarde said he hadn’t told her.
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