Draghi hands baton to Lagarde

ECB chief Mario Draghi bows out Monday, passing the baton to former IMF head Christine Lagarde whose first task will be to heal rifts among policymakers. The man credited with saving the euro during his eight-year tenure at the European Central Bank will be sent off with speeches by German Chancellor Angela Merkel, French President Emmanuel Macron and Italian head of state Sergio Mattarella.

But before Draghi has even left the bank's Frankfurt headquarters, attention is switching to Lagarde, a French former economy minister about to become the ECB's first female president. While the 63-year-old has ambitions to focus on gender equality, climate action and jargon-free language, analysts say the most pressing issue is to resolve divisions over Draghi's final monetary stimulus package.

The Italian central banker in September restarted government and corporate bond purchases to the tune of 20 billion euros ($22.2 billion) per month to bolster a stuttering eurozone economy. The move sparked fierce public criticism from some of the ECB governing council's 25 members, who argued it was too heavy-handed and robbed the bank of firepower in case of a more protracted downturn.

Finding a way to bridge the divide and "have the two sides talk to each other" will top Lagarde's to-do list, said ING bank economist Carsten Brzeski. "This also means that there won't be any imminent changes to monetary policy." Not an economist herself, Lagarde lacks the technical expertise of other members on the council, made up of 19 central banker governors and a six-person executive board.

But she is a savvy, well-connected politician who won plaudits for guiding the International Monetary Fund (IMF) through the aftermath of the financial crisis. "Lagarde will be more depending on advice from others," Brzeski told AFP. "That doesn't have to be a disadvantage but will definitely be a change in style."

Lagarde, a lawyer by training, has already signalled that Draghi's easy-money legacy will be in safe hands. In a bid to drive up growth and stubbornly low inflation, Draghi guided the ECB council as it set interest rates at historic lows, hoovered up 2.6 trillion euros in bond buys and offered ultra-cheap loans to banks. Lagarde told EU lawmakers last month she would stick to the "same sound principles" as the euro area grapples with headwinds from US-led trade tensions, Brexit chaos and slumping German exports.