Christine Lagarde urged the European Central Bank (ECB) to be patient as it seeks to reduce its now €8 trillion balance sheet in the face of runaway inflation, and asked viewers to imagine the damage to the economy if the central bank had not intervened on such a large scale during the covid crisis.
"It will come, it will come, in due course, yes," replied an at least slightly uncomfortable-looking ECB President Christine Lagarde when presented with the steeply up and to the right graph of the central bank's balance sheet and asked how she planned to reduce it. "How," the questioner repeated. "In due course, that will be done," she assured.
The latest EU report estimates eurozone inflation at 7.5% in April, up from 5.1% three months earlier and 1.6% a year earlier.
Look at the "counterfactual situation," Lagarde argued. Had the ECB not stepped in with an emergency asset purchase package when the Covid closures began, and had it not massively expanded that program when the pandemic persisted, the damage to the EU economy would have been devastating.
Earlier in the interview, Lagarde had called cryptocurrencies (including Bitcoin) worthless. When asked by an audience member if she owned digital assets, Lagarde denied it, but acknowledged that her son had invested. About his success, or lack thereof, Lagarde said he did not tell her.