Lagarde Faces Call From Merkel Ally to Reverse ECB Policy Course

(Bloomberg) --

European Central Bank President Christine Lagarde, on her second day in the job, is already facing a German political challenge to her institution’s ultra-loose monetary policy.

Alexander Dobrindt, caucus leader of Chancellor Angela Merkel’s ruling Bavarian sister party CSU, appealed to the new French chief to turn a leaf from her predecessor, Mario Draghi.

“Lagarde inherits a difficult legacy from Draghi,” Dobrindt told reporters on Tuesday in Berlin. “We urgently call on Lagarde to change the course set by Draghi, and to end his policy of low interest rates.”

The CSU supports the ECB’s independence, he stressed, but added: “Independence cannot mean that monetary policy depends on the debt policy of southern European member states.”

The remarks chime with a legacy of discontent about the ECB’s policies in the nation that the Frankfurt-based institution calls home. They are also consistent with longstanding criticism by the CSU. The party, a faction in Merkel’s ruling CDU-led conservative bloc in the Bundestag, was an outspoken critic of her government’s financial aid policy for Greece during the euro crisis.

During a farewell ceremony for Draghi last week, Merkel praised Draghi for helping to save the euro zone. She also stressed that “the ECB can’t do the homework of governments that they themselves need to do to strengthen their competitiveness.”

Lagarde delivered her first speech as ECB president on Monday in Berlin. She steered clear of monetary policy, and instead urged Europe to overcome self-doubt.

To contact the reporter on this story: Arne Delfs in Berlin at adelfs@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Craig Stirling, Zoe Schneeweiss

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