Nordea strategist on ECB president: “She is not very good at calming people down”

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As yesterday's press conference with the head of the European Central Bank unfolded, the markets dropped further into the red. The head of global strategy at Nordea was particularly disappointed by Christine Langarde in one respect.

There was no mercy from the financial market for the president of the European Central Bank, Christine Lagarde, after a press conference on Thursday. Some observers think that Lagarde actually managed to add a European debt crisis to the economic crisis that is already evolving because of the coronavirus at the conference. "This is what happens when you get a lawyer to manage one of the economy's most important organizations," says Andreas Steno, global chief strategist at Nordea, to Finanswatch. As part of a large package of monetary easing policies, the Eurozone's financial systems received extra and expanded credit facilities for banks, the purchasing program was extended for the rest of 2020 and the central bank financial authority canceled additional capital and liquidity requirements for banks. "The contents of the easing policies are fine. The problem was what she said at the press conference about ECB not needing to concentrate on the interest spread between, for example, German and Italian government bonds. That is completely nonsensical," says Steno from Nordea. "It was the worst effort ever at a central bank press conference," he adds. On the financial markets, the equity downturn accelerated. On the bond market, interest rates jumped significantly, especially on Italian government bonds. The remark from Christine Lagarde came after the official presentation of the monetary easing package, in response to a question from one of the journalists present at the press conference in Frankfurt. "We are not here to minimize the interest spread ," she said. When a significant crisis looks likely, the central bank's traditional role is to be a lender of last resort. That is, the financial institutions and systems' final escape route if the market crashes. This is why Lagarde's response has baffled Steno. "When there is stability, and the economy is under control, it makes perfect sense for a central bank president to say something like that. That is almost what is expected. But when Italy is in the midst of a humanitarian and economic crisis, it makes no sense," he says.

This post originally appeared on AM Watch.

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