ECB’s Lagarde: New Patterns of Consumption a Normalisation Trend

19 January 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Friday said that new patterns of consumption, trade and inflation were normalisation trends.

In a panel discussion during the Annual Meeting of the World Economic Forum in Davos, Switzerland, Lagarde, disinclined to discuss monetary policy due to the quiet period before the Governing Council meeting next week, talked about what she called the trends of normalisation after 2023, namely weaker consumption, a pickup in trade and a slowdown in inflation around the world.

‘In ’23 we have seen the beginning of normalisation. When you look at consumption, for instance, around the world, I’m not talking just about the euro area, consumption is still a driving force for growth, but the tailwinds that we had the benefit of are gradually fading’, she said.

Globalisation had had a positive effect in terms of taking people out of poverty, but what was once a ‘virtuous path’ was no longer, she said.

‘[B]ecause there is more vulnerability associated with supply, it may well be that the cost will be higher in the long term. And maybe that’s not such a bad thing, maybe we’ve been relying on this principle of efficiency over security a little bit too much, assuming that everything has virtually no cost, assuming that labour cost had to be minimal and reduced over the course of time’, she said.

There was hope, however, and the situation could be reversed by bringing ‘people who had the benefit of globalisation and were taken out of poverty also out of this recessing poverty that is at risk of bringing some of them back down again’, she said.