Eurozone chief red-faced as staff turn against her: 'Nobody listens to Christine Lagarde!'


Christine Lagarde is the President of the European Central Bank, in effect overseeing the Eurozone (Image: GETTY)

chief ’s term in office has been largely characterised by her poor communication skills, and when she starts speaking “most traders don’t bother putting the telly on”, a financial analyst has said.

David Morrison, speaking in advance of today’s Governing Council of the European Central Bank in Frankfurt, of which Ms Lagarde is President, also pointed to a survey published this week indicating the 68-year-old Frenchwoman is markedly less popular among her staff than either of her two predecessors.

Mr Morrison, Senior Market Analyst at FCA-regulated fintech and financial services provider Trade Nation, told “Christine Lagarde is a controversial figure who arguably should never have been given the job. Her background is in law rather than central banking, and ahead of her appointment, and while head of the IMF, a French court found her guilty of negligence.

“As finance minister under Nicolas Sarkozy, she approved a large taxpayer bailout for French businessman Bernard Tapie.”

The trade union survey of ECB staff, seen by Politico, suggested slightly more than half of the respondents – 50.6 – ranked her overall performance in the first half of her eight-year term as either “very poor” or “poor”.

European Central Bank (ECB) Celebrates 25th Anniversary

Mario Draghi, Jean-Claude Trichet and Mario Draghi celebrate the ECB’s 25th anniversary last year (Image: Getty)

By contrast, just 8.9 percent rated Mario Draghi, whom Ms Lagarde took over from in 2019, in the bottom two categories, with the figure 14.9 percent for Jean-Claude Trichet, who held the post from 2004 to 2011.

Mr Morrison continued: “ECB staff said they don’t think she’s the right person to head the ECB, and she’s more unpopular than either Mario Draghi or his predecessor, Jean-Claude Trichet.

“Among other things, she’s accused of using the ECB role as a stepping stone for her next appointment, unlike Mr Draghi who, people say, was there for the ECB rather than the other way round.

“Although the latter went on to be an Italian prime minister, something that is unlikely to have happened without his ECB credentials.”

Mr Morrison conceded that Ms Lagarde had had to battle high inflation throughout the monetary union, which was something neither Mr Draghi nor Mr Trichet had been faced with.

He continued: “She’s also dealing with a war in Europe, following a global pandemic. But Jean-Claude Trichet had to deal with the Great Financial Crisis, although he was responsible for unadvisedly raising rates even as it was unfolding.

Mario Draghi At The Second Day Of The European Council Summit In Brussels

Mario Draghi has also served as Italy’s Prime Minister (Image: Getty)

“Mario Draghi is credited as the man who saved the euro, pledging to ‘do whatever it takes’ back in July 2012. It worked, although there will be some who believe it would have been better if it hadn’t.”

The former Managing Director of the International Monetary Fund has also faced accusations of being too political, Mr Morrison pointed out.

He explained: “Ms Lagarde has made statements about climate change and the environment, and that is always going to upset someone.

“The UK had its own problems when the Bank of England governor, Mark Carney, went way beyond his remit, making no secret of his views on Brexit or climate change.

“But perhaps her key problem is her communication skills and how they apply in her current role. Some clue to how her employees must feel comes at each monetary policy meeting press conference.

“When Jean-Claude Trichet and Mario Draghi were speaking, you could hear a pin drop across trading floors. But in the last few years of the Lagarde presidency, most traders don’t bother putting the telly on.”

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Day Three Of The World Economic Forum (WEF) 2024

Former Bank of England Governor Mark Carney was not without his critics, Mr Morrison pointed out (Image: Getty)

Lindsay James, investment strategist at Quilter Investors, was rather more forgiving of Ms Lagarde.

Sh told “This trade union survey, which polled less than 25 percent of workers, seems to largely reflect the common gripes of many employees in countless organisations rather than being a comment on the effectiveness of monetary policy under the leadership of Christine Lagarde.”

The research appeared to be “largely an internal issue for the ECB” as opposed to one closely linked to what he called the bank’s “rate-setting agenda”.

She added: “Central bankers across the world have in recent years undoubtedly all faced their share of criticism in the face of high inflation.

“However they have been working through a unique set of conditions including a pandemic, which disrupted not only consumer spending patterns but also supply chains and the economic cycle, as well as the ensuing outbreak of war in Ukraine which led to soaring energy prices.”

Eurozone: Christine Lagarde outlines ECB plans for first rate hike

This had left monetary policy alone ill-equipped for the “prevailing environment”, Ms James stressed.

She said: “While many of the causes of inflation are now working through the system, and high interest rates may have expedited that to some degree, in this context it is unfair to pin much blame on central bankers still operating in the face of ballooning government debt issuance across the developed world, challenging demographics and ongoing geopolitical conflict.”

Inflation in Europe rose to 2.9 percent last month, bucking the trend after falling for seven consecutive months as food prices rose and support for high energy bills ended in some countries.

The rise in price levels fuelled debate over how soon interest rate cuts could be expected from the European Central Bank.

Ms Lagarde, speaking earlier this month, said: “I think the hardest part is behind us,

“I think that rates, barring any further shocks or unexpected data, will not continue to go up. And if we win our fight against inflation, and if we are certain that inflation will indeed be at two percent, at that point rates will start to go down.”

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