Frankfurt (AFP)

The future President of the ECB Christine Lagarde unveiled Thursday its intentions by saying that it wants to maintain the broad support of the euro zone economy of the Italian Mario Draghi, despite the criticism it raises.

"It is clear that monetary policy needs to remain very accommodative in the foreseeable future," she said in written responses to the European Parliament released Thursday, as part of the process of validating her appointment to the head of the European Central Bank, which will become effective on 1 November.

Even better, it has sparked further interest rate cuts for banks, which are already at historically low levels in the euro area due to sluggish growth.

"I do not think the ECB has reached the bottom," said the current Managing Director of the International Monetary Fund and former French Minister of the Economy.

Lagarde is therefore in line with the policy pursued so far by the current President of the ECB, Mario Draghi, decided for several years to avoid a slide towards deflation and a new crisis in the euro area, via the generous provision of liquidity on the market and very low rates.

- Reviews -

His remarks are likely to be badly perceived, especially in Germany, where several political parties and especially the banking sector accuse the ECB of ruining the savers of the country having placed their savings in savings accounts.

Some German banks have already started taxing their clients for their deposit accounts. Others threaten to do it, like this week the federation of savings banks.

Many Germans believe that the generous policy of the ECB is made for troubled southern European countries such as Italy, Spain or Greece, but that it does not correspond to the needs of their country.

Oliver Bäte, boss of the German insurance giant Allianz, said the ECB is wrong because its policy "withdraws pressure on the governments of the euro area to clean up their finances," he said Tuesday in Frankfurt before the economic press club.

An allusion to southern European countries that record fiscal deficits, while Germany continues to post comfortable budget surpluses.

Mario Draghi has so far defended this policy which officially aims to stimulate inflation, which is too weak today, and which in turn has supported growth and employment.

For Mrs Lagarde, Mr Draghi is right. The ECB is still far from having won its bet of inflation, whose rate has remained in recent years "consistently below levels consistent with the objective" of the institution, which is slightly less than 2%, a- she stressed.

- Divisions -

And like him, she is worried about the sluggish situation in the eurozone. "The economic expansion of the euro area has slowed recently" and "growth prospects are down", justifying the need for support measures, she said in her written responses.

At the same time, it is "clear that low rates have implications for the banking sector and financial stability in general," she said. A way to try to reassure Germany and its banking sector.

The 25-member Governing Council of the ECB is itself divided on the subject.

Bank of the Netherlands Governor Klaas Knot said on Thursday that the eurozone economy was not weak enough to justify a pickup in debt purchases.

As for Bundesbank President Jens Weidmann, an unfortunate presidential candidate for the ECB, he sees "no reason for panic".

The next meeting of the Institut Francfortois on 12 September will be followed very closely. It could lead to a package of support measures with revival of the program of buybacks of debt on the market, put to sleep at the end of 2018.

© 2019 AFP