She pointed to Article 123 of the Treaty on the Functioning of the European Union, which prohibits the ECB and national central banks from financing governments. The provision was agreed to and ratified by all EU member countries, Lagarde stressed.
Lagarde also dismissed the proposal on economic grounds, citing “very, very solid economists,” including former International Monetary Fund chief economist Olivier Blanchard, who can “demonstrate easily” that such a move would be “financially dangerous.”
Mélenchon renewed his call in August for the ECB to freeze pandemic-era government debt, arguing that the move would create additional fiscal space for France. Public debt amounts to more than €3.5 trillion, or 117.5 percent of French GDP, and the issue has become a top concern for voters.
Ahead of today’s rate decision, Mélenchon also criticized the ECB’s widely expected hike, warning on X that “the ECB is leading us straight into the wall.”
Lagarde also used the press conference to dismiss renewed speculation about an imminent announcement that she would leave the ECB early. Rumors have swirled for months, after she left open the possibility of playing a role in the French presidential campaign.