Christine Lagarde: Interview with La Croix

Christine Lagarde, former President of the European Central Bank, has experienced numerous crises throughout her career, including the financial crisis of 2008, the Greek debt crisis, and now the COVID-19 pandemic, the Russia-Ukraine war, and the conflict in the Middle East. Lagarde believes that the interconnectedness of these crises is unprecedented and poses a significant threat to the European economy.

The primary concern is the energy crisis stemming from the Middle East conflict, which is driving up prices and negatively impacting economic growth.

Lagarde takes pride in the ECB's ability to respond to crises with decisive measures while maintaining consensus among its members. She has tried to include various viewpoints, balancing both "doves" who favor low interest rates to stimulate economic activity and "hawks" advocating for higher rates to curb inflation. However, she acknowledges past mistakes, such as underestimating the interconnectedness of crises and the surge in demand following the pandemic.

Lagarde intentionally rejects labels like hawk or dove, instead positioning herself as an owl symbolizing wisdom and intelligence. She emphasizes the importance of factual evidence and adapting to changing circumstances rather than adhering to a rigid stance on monetary policy. The ECB raised interest rates in June and September, but Lagarde remains cautious about the potential slowdown in economic activity, acknowledging that the central bank cannot control external factors such as oil prices or gas reserves.

Despite France's economic challenges, Lagarde is not willing to label it as "the new sick country" of Europe. She cites the European financial system's strength and the resilience of other euro area countries that have weathered previous crises. Lagarde stresses the importance of a credible path, shared commitment, and reforms to restore confidence.

She also highlights the need for administrative and regulatory simplification, labor market reforms, and addressing pension sustainability. Additionally, Lagarde calls for European-level action, such as deepening the capital markets union to facilitate European savings in financing investments.