MNI POLICY: ECB Review To Leave 'No Stone Unturned' - Lagarde

By Luke Heighton

     FRANKFURT (MNI) - Politicians, citizens and civil society representatives

will be invited to participate in the ECB's review of its monetary policy

strategy, president Christine Lagarde said Monday, while climate change should

be a key factor in its analysis of the macroeconomic environment.

     Here are key points from Lagarde's appearance before the Committee on

Economic and Monetary Affairs in Brussels:

     --Slow growth and low inflation in the eurozone are largely the result of

external factors, Lagarde said, with the outlook for the global economy

"sluggish." Nevertheless, she added, "monetary policy can respond effectively

[...] And it can do so by ensuring favourable financing conditions for all

sectors of the economy and providing visibility on those conditions into the

future."

     The ECB's review of its monetary strategy will start "in the near future,"

Lagarde said, and will be both "thorough" and "open-minded." Asked whether a

price stability target rate of close to, but below 2% inflation would be up for

debate, Lagarde replied that "every stone will have to be turned, and every

option will have to be examined," while stressing that the ECB's core mandate is

to deliver price stability. She was, however, "not passing judgement on what it

is at the moment."

     --"It is important to me that our focus on connecting with the people we

serve continues and grows stronger - in particular by improving the ways in

which we communicate with the general public," Lagarde said. This "two-way

street communication will really find its place in the strategic review,"

Lagarde said, and she invited MEP's, their constituents and civil society groups

to be part of that process."

     --Climate change will be at the heart of the strategic review, Lagarde

confirmed - at least in so far as it impacts on the ECB's core mandate, price

stability. "I am fundamentally convinced that fighting climate change has to be

a central plank of policy," Lagarde said, as she called for the effects of

climate change to be factored not only into the ECB's macroeconomic models,

portfolio management and operations, but also into those of financial

institutions. "We have to explore how we can be effective in fighting climate

change," Lagarde added, at the same time as she stressed it was only a

"secondary" aspect of central banking.

--MNI Frankfurt Bureau; +49-69-720-146; email: luke.heighton@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

[TOPICS: M$X$$$,MT$$$$,M$$EC$]