Lagarde wants governments to spend more money

Lagarde has only just started at the ECB and has already made her mark on policy. Last Wednesday, she said that countries such as the Netherlands and Germany have to take the hand off the cut and have to spend more money. According to the brand-new central banker, these countries have room in the budget to pursue a stimulative policy.

It takes some getting used to, because her predecessors at the central bank usually did not interfere in fiscal policy. This is the domain of politics and not the responsibility of the central bank. But if Lagarde is to be believed, fiscal stimulus is needed to conduct an effective monetary policy. In a speech earlier this week, she said that these two need to be aligned for optimal results.

From monetary to fiscal policy

Lagarde's change of course confirms our suspicion that the central bank led by the Frenchwoman will become more involved in politics. This is also evident from other statements she made this week. In the same way, she has Said that we should be pleased that employment has increased as a result of monetary policy, even if this is at the expense of the safety of our savings.

According to Draghi, the monetary policy of extremely low interest rates has been a success, because it has created millions of jobs. The fact that savings and pension pots have been eroded as a result appears to be of secondary importance. Lagarde now dares to say this explicitly by giving employment a higher priority than the safety of savings.

The ECB will start buying €20 billion in government bonds this month. With this measure, which was already announced by Draghi, Lagarde will have more leeway to engage in politics. There are already stories that they are so-called Green bonds bonds that have been classified as 'sustainable'. This is a worrying development.