Do Ms. Lagarde and Mr. Draghi think alike?
Here’s a quick read on what they say:
On weak inflation
Mr. Draghi, June 18, 2019:
In the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required.
Ms. Lagarde, April 2, 2019:
Monetary policy should remain accommodative where inflation is below target, and should anchor expectations. Exchange rate flexibility should be used, as needed, to help absorb shocks.
QUICK TAKE: Central banks should step in if inflation is weak.
On government and monetary policy
Mr. Draghi, June 18, 2019:
Monetary policy can always achieve its objective alone, but especially in Europe, where public sectors are large, it can do so faster and with fewer side effects if fiscal policies are aligned with it.
Ms. Lagarde, Oct. 5, 2017:
Of course, monetary policy is most effective when complemented with sound fiscal policies that promote long-term, sustainable growth.
QUICK TAKE: Moves by the central bank are most effective when they work in tandem with government spending policies.
On banking union
Mr. Draghi, April 12, 2019:
The Economic and Monetary Union needs to be strengthened, first and foremost by implementing what has already been agreed and finishing the common projects we have started: completing the banking union, strengthening the operational capacity of the European Stability Mechanism in full compliance with Union law, and making ambitious progress on the capital markets union.
Ms. Lagarde, March 28, 2019:
Going on 20 years, the time is ripe for the euro area to show new resolve and complete the banking and capital markets unions — so it can harvest the benefits now and in the future.
QUICK TAKE: Deeper integration of the eurozone’s financial sector will make it stronger.
