The performance of the European Central Bank and Christine Lagarde has been questioned, given the shocks in the financial system
SIM The timing of the ECB’s decision-making within the scope of monetary policy, at the March 2023 meeting, was particularly complex given the very recent events in the financial sector in the US and Europe (SVB and Credit Suisse), and the signs of some instability in the international financial markets. However, the decision was the right one although, as the authority’s communiqué mentions as well as President Lagarde’s statements, the ECB’s posture in the near future will have to change in view of what was anticipated before these events.
In fact, if we look at the real side of the economy, the signs justify further increases in interest rates in the euro zone. Activity indicators suggest a better dynamic than expected a few months ago, for example the PMI indices for the region and the main European economies returned above the 50 threshold (pointing to expansion) more firmly in February. The sentiment indicators also reflect a strengthening of confidence, albeit moderate, across consumers and companies from different sectors, after the recent lows registered in October/November. All things considered, and with the information available so far, everything suggests that the EMU economy will register a slight expansion of economic activity in the first three months of the year, contrary to what was feared. In this line, the forecasts of the various analysts have been improved.