German Bild's Sharp Criticism: "Lagarde, Who Likes Chanel, Is Making Europeans Poor"

Criticism of ECB for No Change in Monetary Policy Stance "Inflation Reduces Value of Pensions and Wages for Europeans"
US and UK Expected to Emphasize Tightening at November Monetary Policy Meetings… Goldman Sachs Predicts "US Rate Hike in July Next Year"

Christine Lagarde, President of the European Central Bank
Photo by Reuters Yonhap News

[Asia Economy Reporter Park Byung-hee] Bild, Germany's best-selling tabloid daily newspaper, has strongly criticized Christine Lagarde, President of the European Central Bank (ECB).

Bild pointed out that President Lagarde is maintaining the ECB's accommodative monetary policy stance, which is causing inflation and making life difficult for Europeans.

Using the term "Madam Inflation," Bild sharply criticized President Lagarde. It criticized her as a high-income earner making around 40,000 euros per month who enjoys luxury brands like Chanel but pays little attention to the hardships faced by ordinary people. Bild stated that President Lagarde is neglecting inflation, which is reducing the real value of Europeans' pensions, wages, and savings, thereby impoverishing them.

The ECB maintained its existing monetary policy stance at the monetary policy meeting on the 28th. President Lagarde expressed the view that the current high inflation situation is expected to last longer than anticipated but is expected to ease next year. While major countries such as the United States, the United Kingdom, and Canada are reducing the scale of quantitative easing or announcing plans to do so, and even showing willingness to raise benchmark interest rates, shifting monetary policy toward tightening, the ECB is still maintaining a loose monetary policy.

Coincidentally, the Eurozone's October consumer price inflation rate, announced the day after the monetary policy meeting, greatly exceeded expectations (3.7%) and recorded the highest level in 13 years at 4.1%.

Germany, the largest economy in Europe, has traditionally maintained a critical stance toward the ECB's loose monetary policy. Jens Weidmann, President of Germany's central bank Bundesbank, is the most hawkish member of the ECB's monetary policy committee. President Weidmann recently announced his intention to resign as Bundesbank President. Bild's criticism of President Lagarde came just one week after Weidmann announced his resignation. Bild also strongly criticized Mario Draghi, then ECB President and current Italian Prime Minister, in 2019.

Due to supply chain disruptions and rising energy prices, inflation has surged sharply, prompting major countries to rapidly shift toward tightening.

The U.S. Federal Reserve (Fed) is expected to announce tapering, a reduction in quantitative easing, at its monetary policy meeting on November 2-3.

Goldman Sachs, in a report released on the 29th, predicted that the Fed will raise benchmark interest rates in July next year. Goldman Sachs said the Fed would raise rates immediately after completing an eight-month tapering starting in November, moving the expected timing about a year earlier than previously anticipated. Goldman Sachs expects an additional rate hike in November next year after the initial increase in July.

The Bank of England is also expected to signal tightening at its monetary policy meeting on December 4. Governor Bailey said at an online forum on the 17th that if inflation continues due to energy shortages and supply chain disruptions, the central bank must take action. Subsequently, Goldman Sachs, JP Morgan Chase, and others predicted that the BOE might raise benchmark interest rates as early as November.

The Bank of Canada declared an early end to quantitative easing at its monetary policy meeting on the 27th. While the market expected the quantitative easing scale of 2 billion Canadian dollars per week to be reduced to 1 billion Canadian dollars, the Bank of Canada announced a complete end. It also indicated that the expected timing of interest rate hikes, previously anticipated for the second half of next year, could be moved up to mid-next year.