Neither banker nor economist, Christine Lagarde will head the ECB

Monetary policy is a highly sensitive issue in a context of growing uncertainty as a result of the Trump administration’s trade upheaval and the somewhat certainty that a recession will soon conclude the cycle of economic expansion that began in June 2009.

The appointment of Christine Lagarde, former French Finance Minister and Managing Director of the IMF, as President of the European Central Bank (ECB) and her alleged lack of experience in economics and central banking leave unanswered those who wonder about what will be the major orientation of her monetary policy.

A number argues that she will be dovish considering that her appointment, presumed political, resulted from an agreement between leaders Emmanuel Macron and Angela Merkel who, like their counterpart Donald Trump, need an accommodating central bank in order to not hasten a possible entry into recession that would weigh on the electoral calendar by 2022.

“Lagarde has all the confidence of Merkel so I do not ask myself any question about her ability to lead the ECB,” a French bank executive told us today.