By Piotr Skolimowski
(Bloomberg) -- Christine Lagarde said the European Central
Bank will be "resolute" in restoringeuro-zone price stability
under her presidency, while stressing that an upcoming strategy
review will be open-minded.
"The ECB's accommodative policy stance has been a key
driver of domestic demand during the recovery, and that stance
remains in place," she said in the text of opening remarks at
the European Parliament for her first testimony in the role.
"It is premature to venture here into debates about the
precise scope, direction and timeline of our review, as the
matter has not yet been discussed thoroughly by the Governing
Council," she said. "What I can confirm, however, is that the
strategy review will be guided by two principles: thorough
analysis and an open mind."
Lagarde acknowledged the side effects of the ECB's ultra-
loose policy -- negative interest rates, quantitative easing and
long-term bank loans -- and said the review will try to gain a
better understanding of how longer-term trends affect what the
central bank can control.
Inflation has yet to return to the goal of just under 2%
despite years of pumping liquidity into the financial system,
and the ECB itself has become increasingly concerned that its
policies might threaten financial stability.
The new ECB head made only a passing mention of climate
change in her opening remarks. The central bank has come under
increasing pressure to play a bigger role in that area, though
policy makers including Bundesbank President Jens Weidmann have
warned against heavy-handed steps such as barring the bonds of
polluters from QE, an idea proposed recently by a group of
activists and academics in an open letter to Lagarde.
"New challenges have emerged such as demographics,
disruptive technology and climate change," she said.
"Conventional wisdom has been challenged and monetary policy
globally has explored unchartered territories."