christine lagarde : hearing of the committee on economic and monetary affairs of the european parliament introductory statement by ms christine lagarde, president of the european central bank, at the econ committee of the european parliament, brussels, 2 december 2019. * * * madam chair, honourable members of the economic and monetary affairs committee, ladies and gentlemen, 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. 1 my predecessors at the ecb were alert to this and already acted to address the challenge. the ecb ’ s accountability practices have evolved2, 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. the current economic situation and monetary policy 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

fact that the federal reserve has delayed its interest rate increase. they are saying that these two issues point to the ecb ultimately having to extend its programme or indeed deepen it. do you think that those institutions are making a mistake by jumping to that conclusion? i guess we are all in the same place here. the global economy is growing modestly and the euro area economy is recovering modestly. we don ’ t want to waste that recovery, so we have to be very careful. certainly, in our judgement, in our analysis, the risks come from the outside. so we see a downside risk to recovery. that downside risk doesn ’ t come from inside the euro area, it comes from outside, and in particular from emerging market economies. we are following this very carefully and, of course, we have got to be ready. if anything were to happen, we want to know what we would do. here in lima we are very much in fact - finding mode. we are listening. we are listening to chinese colleagues, listening to the imf very carefully. if anything were needed, we would need to be ready. but it is too early to pass that kind of judgement. so we shouldn ’ t prejudge here. i wonder if part of the reason is that there ’ s still a lag effect in the existing qe programme? of course, we have only executed, delivered, one third of the programme. we are also benefiting from these lag effects of the previous measures : targeted liquidity tenders, forward guidance, low interest rates. it is all feeding into the economy at a slow pace, so it is certainly too early to measure the full extent of what we have done over the last couple of years. so, is it premature to start thinking about another qe programme? it ’ s premature to discuss it. but it is certainly our duty to be prepared to cope with all kinds of contingencies. the oil price has been fascinating recently. we are back at usd 50 a barrel here. so we are starting to ask the question whether inflation expectations are being pitched too low, because people are fixated on a continuation of a very low oil price. inflation expectations are well on course in the long term, so the whole discussion is about how fast they will come back to 2 %, how fast inflation will come back to 2 %? the faster, the better, obviously, so if the oil price were to stabilise