Christine Lagarde faces ECON committee at the European Parliament

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Christine Lagarde, President of the ECB, at the ECON committee of the European Parliament. Introductory statement by Christine Lagarde and hearing at the Committee on Economic and Monetary Affairs of the European Parliament.
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LIVE EP Committee on Economic and Monetary Affairs Monetary Dialogue with Christine LAGARDE, President of the European Central Bank.

SPEECH
...I am very happy to be back before this Committee for my first regular hearing as ECB President. I want to express my personal and sincere gratitude to this house for the support I received during the appointment process. And I look forward to a constructive and positive relationship between our two institutions going forward.

The connection between the ECB and the European Parliament is especially valuable today as a means to reinforce trust in European institutions.

In the euro area, support for the single currency has grown steadily in recent years, rising from a low of 62% in 2013 during the crisis to an all-time high of 76% today. Trust in the ECB has grown in that time as well – but its recovery after the crisis has been less dynamic.

My predecessors at the ECB were alert to this and already acted to address the challenge. The ECB’s accountability practices have evolved, as has its communication strategy. And the ECB’s transparency, ethics and good governance frameworks have been harmonised, strengthened and extended to all members of the Governing Council and Supervisory Board.[3]

But it is important to me that our focus on connecting with the people we serve continues and grows stronger – in particular by improving the ways in which we communicate with the general public.
And this is why your role in the Parliament is so important: you make sure that the people’s voice is heard by the ECB and the ECB’s voice is heard by the people.

Communication is a two way street and it is vitally important for democracy, a founding principle of Europe. It is in this spirit that I will approach this hearing – and those we will have together in the future.
Let me start by looking at the current economic situation in the euro area, before moving on to the longer-term questions for monetary policy about which you have enquired.
Euro area growth remains weak, with gross domestic product growing by only 0.2%, quarter on quarter, in the third quarter of 2019. This weakness has been mainly due to global factors.
The world economy outlook remains sluggish and uncertain. This lowers demand for euro area goods and services and also affects business sentiment and investment.
As the sector most directly exposed to these global developments, the manufacturing industry has been suffering the most. We are also seeing signs of spillovers to other parts of the economy, with recent survey data pointing to some moderation in the services sector.
Yet, consumption has held up fairly well: labour market conditions have continued to improve, encouraging consumers to remain confident and to continue to spend.
The prolonged slowdown in economic activity has nevertheless been affecting price developments, which remain subdued. According to Eurostat’s flash estimate, inflation stood at 1.0% in November. Whether we look at surveys or market-based measures, inflation expectations are at or close to historical lows.

What can the ECB do in a weaker economic environment to fulfil its price stability mandate?