If you were looking for clues on ECB monetary policy last Friday, Christine Lagarde’s second speech as central bank President was again disappointing. Like the first speech, Lagarde failed to give any hints on future monetary policy. And neither did the speech reveal any deep or even deeper insight on how she views the ECB’s monetary policy or monetary policy in general. If we had to summarize the speech, it would come down to this: the ECB’s current policy stance is justified, given sluggish growth and inflation still below target. But the side-effects of the ECB’s monetary policy are becoming more profound, and fiscal policy should now do the heavy lifting of boosting growth, prices and incomes.

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