{"id":453779,"date":"2026-05-18T11:21:27","date_gmt":"2026-05-18T09:21:27","guid":{"rendered":"https:\/\/www.eunews.it\/?p=453779"},"modified":"2026-05-18T12:31:13","modified_gmt":"2026-05-18T10:31:13","slug":"lagarde-and-the-owl-of-minerva","status":"publish","type":"post","link":"https:\/\/www.eunews.it\/en\/2026\/05\/18\/lagarde-and-the-owl-of-minerva\/","title":{"rendered":"Lagarde and the Owl of Minerva"},"content":{"rendered":"

One evening in the first week of March, on the terrace at Oosten<\/em> (the glass-fronted spot perched on the Molenkopf, by the river, with a direct view of the ECB’s new tower in the Ostend district), an old contact, an economist at a German private bank<\/em>, was discussing with a Frankfurt official the closure of the Strait of Hormuz the way one discusses an operational hiccup, not a historic event. Same crisis, different conflict<\/em>. The line is useful for framing what has happened at the Eurotower over the past ten weeks.<\/p>\n

Not the original Eurotower on Willy-Brandt-Platz, it should be said. The complex now sits in the Ostend, on the bank of the Main, where the Gro\u00dfmarkthalle<\/em>, the old wholesale market hall built in 1928, serves as the plinth for the two towers designed by Coop Himmelb(l)au<\/em>, the Cooperative of the Blue Sky, on Sonnemannstra\u00dfe. The street is named after Leopold, the founder of the Frankfurter<\/em> Zeitung<\/em> (it became Allgemeine <\/em>reopening in 1949): it translates as Sunshine Man Street. Lower Saxon humour, except that the Gro\u00dfmarkthalle was also a deportation assembly point. In the early 1940s great departures were staged from there: first the Jews of Frankfurt’s ghetto, then others rounded up across Nazi Germany. A monumental complex, woven into the district. Several inscriptions on the site recall what took place. By way of warning.<\/p>\n

\"\"<\/a>
The Oosten restaurant (Photo from the Website)<\/figcaption><\/figure>\n

Ten weeks. Perhaps the moment has truly come to have a close look to the ecosystem around that small change in our pockets, the same coins and notes that, more and more often, demand from us both reflection and concern. Between 28 February, when Operation Epic Fury hit Iran’s nuclear sites, and today, mid-May, everything has happened: a ceasefire that will not hold, an American fleet stood down and redeployed twice, a Brent price that began eighteen dollars below its 27 February level, climbed back above a hundred and then above a hundred and twenty in a couple of sessions, after the strike on Ras Laffan<\/em>, Qatar’s LNG plant.<\/p>\n

For anyone who lived seven years in the cozy Westend<\/em> at the end of the last century, two bus stops from the old ECB, with an office facing Wim Duisenberg’s Eurotower, the novelty of 2026 is not geographic but professional. The old tower, that is. The same one in front of which the big blue Euro symbol would later be installed; the same one in front of which, from October 2011 to August 2012, the Occupy Frankfurt<\/em> movement camped for ten months, Europe’s reply to Zuccotti Park, red and blue tents pitched among the flowerbeds. Trichet’s tower came under siege over questions of distribution. Christine Lagarde’s is under siege from a variable she cannot govern: the geopolitics of crude.<\/p>\n

The ECB’s official positions, since the start of the crisis, have been consistent and unsurprising. On 19 March, the first Governing Council board after the strikes, the ECB left the three rates unchanged: deposit at two per cent, main refinancing at 2.15%, and marginal lending at 2.40. The same day it revised 2026 inflation from 1.9% to 2.6 per cent and growth from 1.2% to 0.9. In a severe<\/em> scenario, with prolonged supply disruption, inflation is 4.4 this year and 4.8 in 2027. The method is the one the Governing Council agreed at Sintra in the summer of 2025: work by scenarios, no longer by point projections. The frequency of recent shocks (pandemic, Ukraine, American tariffs, Hormuz) has made the traditional macro model obsolete. From the almost purely arithmetic to the globally analytical, one might say. The March minutes record that the medium-term effects on inflation “are very difficult to gauge”, and that the duration of the conflict, the integrity of the energy infrastructure and the reopening of the Strait remain the three discriminating variables. Full stop.<\/p>\n

Christine Lagarde, a Capricorn from New Year’s Day 1956, lawyer and politician, has chosen from the outset a register that is at once doctrinal and operational. At the ECB Watchers<\/em> event on 25 March, the twenty-sixth annual conference bringing together central bankers, analysts, monetarist gurus and the whole monetary fraternity in Frankfurt, she said that “the central bank cannot print molecules of oil”. The line is Vance Howard’s, a strategist<\/em> and major fund manager, picked up and broadcast by CNBC; but in Lagarde’s mouth it pins down the risk that the energy price rise becomes embedded in expectations. Her response, if “the shock is large but not too persistent”, might amount to a measured adjustment<\/em>, an expression that everyone in Frankfurt has translated as “a rate rise or two; calibrated, nothing muscular”.<\/p>\n

At the Berlin Banking Anniversary<\/em> on 20 April, in front of the Bundesverband deutscher Banken<\/em>, the German counterpart of the Italian banking association, gathered for the seventy-fifth anniversary of the Federal Republic, came the line that has become the season’s subtitle: the stop-start<\/em> nature of the conflict, war, truce, resumption, naval blockade, its lifting, fresh closure, makes the horizon extraordinarily difficult to read.<\/p>\n

\"\"<\/a>Quoting Hegel in German, Lagarde added that die Eule der Minerva<\/em> takes flight only at dusk. The Owl of Minerva, as a Wikipedia summary has it, represents wisdom and knowledge; being a nocturnal bird, it has become a negative metaphor in the oldest theory of philosophical knowledge. “Understanding, in other words,” Lagarde explained, “arrives after the experience, not before it.”<\/p>\n

A notable rhetorical choice in a German setting; an explicit admission that the ECB is operating blind. And probably acknowledging that past predictions have not always been accurate. The same week, interviewed in Spanish by TVE, the president acknowledged that the risk is double and symmetrical: react too early, and choke an economy that is already anaemic; react too late, and repeat the 2022 mistake, when central banks dismissed as transitory<\/em> the inflation that was about to push the United States to nine per cent.<\/p>\n

The Governing Council, in this match, is split along a fault line that anyone who knows Frankfurt recognises by heart, and reports back from. The hawkish<\/em> contingent, the hawks (Joachim Nagel at the Bundesbank, Martin Kocher at Austria’s OeNB, Peter Kazimir at Slovakia’s central bank) have already put down in writing that a June rate rise is the baseline to overturn, not confirm. The dovish<\/em> contingent, the doves (Luis de Guindos, the Spanish vice-president, Olli Rehn from Finland, M\u0101rti\u0146\u0161 Kaz\u0101ks from Latvia) call instead for steady nerves, data in hand, no panic. On 13 May, Rehn opened a crack by speaking of “early signs of stagflationary shock”, with first quarter growth barely above zero and April’s headline inflation at 3 per cent. Kazimir, on the opposite side, has described a rate rise as “inevitable barring good news on the war”. Translated: 11 June and 10 September, the two upcoming meetings, are the dates already circled in red on the calendars of European trading desks<\/em>.<\/p>\n

A Bloomberg survey from early May has consolidated the consensus<\/em>: “two rises of twenty five basis points in the course of the year, depo at 2.50 by the end of 2026, first cut deferred to March 2027”. Money markets, more aggressive than economists as almost always, are already pricing a path that culminates at 2.75. The sell side<\/em> notes (BNP Paribas Markets 360, Deutsche Bank, Berenberg, Capital Economics, KPMG) converge in describing Lagarde’s reaction function<\/em> as “more hawkish<\/em> than last autumn”. They all recall, one after the other, that Frankfurt has learned not to underestimate 1973. It is the lesson resurfacing, almost quoted, even in internal talks: “The Federal Reserve’s rate cut in the second half of 1973, motivated by fear of recession, was a miscalculation that produced the stagflation of 1975. And nobody in Frankfurt wants to make it into the history books of international monetary policy for that reason.” So pronounces the old contact.<\/p>\n

Across the press, the voices arrange themselves by geography and by school. It may sound pedantic, but lining them up offers a broad and detailed picture. The Frankfurter Allgemeine Zeitung<\/em>, prudent as ever, has kept its focus on the fossilflation<\/em> angle (inflation from fossil sources, the term made famous by Isabel Schnabel, the German economist on the ECB Executive Board), recalling that Germany, with 5.5 per cent of household income spent on energy against 3.2 per cent in America, is structurally more exposed. Handelsblatt<\/em> has gone more technical, speaking of a Zinsgef\u00fcge<\/em>, the global scaffolding of yields, literally shaken, with markets now expecting and pricing up to four ECB rises over the next twelve months.<\/p>\n

Le Monde<\/em> and Les \u00c9chos<\/em> have stressed the political dimension: France, less dependent on gas thanks to its nuclear fleet, sees in the crisis a confirmation of its own model. From London, Chris Giles in the Financial Times<\/em> has pressed the risk that the ECB ends up making the mirror image of the 2021 mistake, over-tightening<\/em> on a supply shock. The Economist<\/em> has argued that the real problem “is not the oil price, but the synchrony between Hormuz being shut, strategic reserves running down, and the end of Russian LNG imports in April”.<\/p>\n

In the Sole 24 Ore<\/em>, the lead op-ed by Donato Masciandaro has summed up Frankfurt’s posture with the advice to “look through” the relative shock. From Brussels, where after years based in Frankfurt he now follows the ECB, Beda Romano has added the institutional piece: the political reading of the new balance between Eurotower and Berlaymont, with the von der Leyen Commission pushing for targeted fiscal measures while Frankfurt invokes budgetary solidity.<\/p>\n

In the Corriere della Sera<\/em>, Federico Fubini has insisted on the Italian bind: Italy imports the highest share of LNG from the Gulf, has an energy mix that is 38 per cent gas, and every tenth of a point on rates weighs on 2,900 billion euros of public debt. In his Sunday opening column, Ferruccio de Bortoli has turned the point back to the perennial institutional theme, namely the patience of markets towards a country that continues to depend, in a hundred ways, on Frankfurt’s credibility.<\/p>\n

El Pa\u00eds<\/em> has relayed the analysis from the Banco de Espa\u00f1a under Jos\u00e9 Luis Escriv\u00e1, a moderate profile. In the United States, the Wall Street Journal<\/em> has aired the version held by those in Washington who would prefer an ECB behind the curve<\/em>, lagging a touch; the New York Times<\/em>, more clinical, has reported the positions of portfolio managers who read the eurozone as a long-duration trade<\/em> (positions held open for longer), betting on temporary rises and cuts in 2027.<\/p>\n

The think tanks<\/em> have moved largely in the same direction, with shades of difference. Bruegel, in the voice of Jeromin Zettelmeyer who heads it, recommends that the ECB not over-react<\/em> on energy, because the shock is asymmetric: it hits German manufacturing and Italian chemicals harder, services less; better to focus on wages. The Peterson Institute<\/em> has argued that the biggest strategic mistake would be to read the rises as a signal of institutional strength: the priority is to protect long-term expectations, not short-term credibility. Brookings, with Eswar Prasad and David Wessel, has worked on international monetary fragmentation, recalling that the closure of Hormuz is accelerating the diversification of reserve portfolios outside America into gold, the yuan and, marginally, the euro. The Hertie School<\/em> in Berlin, a Mecca for European policy studies, has flagged that contemporary forward guidance<\/em> has been replaced, de facto<\/em>, by scenario guidance<\/em>: with a slightly mannered but elegant phrase, more an epistemological than a semantic shift, that is, a change in how we understand and see the world and name its parts.<\/p>\n

Around the trading desks<\/em>, the noise is of a different register. In Frankfurt, between the Gro\u00dfmarkthalle<\/em> and the four well kept hectares of public green at the Hafenpark<\/em> that take you all the way to the Eurotower, the rates specialists describe a quarter in which the hedges on Schatz<\/em> and Bobl<\/em> futures were recalibrated four times in two weeks of March. Out of the jargon of the city’s still rampant gilded financial youth: these are derivatives traded on German government bonds (the Bund<\/em> we all came to know fifteen years ago, when spread<\/em> became a daily word) and they set the eurozone’s interest rates. The Schatz<\/em>, “little treasure”, are short-term, up to two years; the Bobl<\/em>, Bundesobligationen<\/em>, are five-year federal government bonds.<\/p>\n

The talk on the floor<\/em>, the gossipy chatter of these circles (Klicke<\/em> in German, with a sound close to clique), is that the ECB will turn up in June with a technical<\/em> rate rise, telegraphed, calibrated so as not to fragment peripheral spreads<\/em> any further. In London, in the City<\/em>, the wizards at Goldman Sachs, Morgan Stanley and BNP Paribas Markets 360 see in an ECB rise an opportunistic risk: institutional clients (Dutch pension funds, sovereign funds from the Gulf, Scandinavian asset managers) have cut their duration in the euro area, while keeping their volume in the investments they judge best.<\/p>\n

In New York the mood is bifocal. Those trading cross-asset<\/em> are playing the dollar as a safe haven for as long as the DXY<\/em>, the US Dollar Index, stays above 97; those trading European equities are hunting for value in French nuclear utilities, Scandinavian generators, and German defence names, which have doubled in a year. On the floor<\/em> at the NYSE, says a European fixed income specialist, “the word is quiet hawk<\/em>: the ECB, the silent hawk, will not shout, but it will raise”. Will the Owl of Minerva turn out to be a quiet hawk?<\/p>\n

The impact on fixed income is already evident and observable. The ten-year Bund, at 2.65 at the end of February, has risen to around 3 percent, near fifteen-year highs; the ten-year OAT, Obligations Assimilables du Tr\u00e9sor, the French bond, has increased from 3.2 to 3.7, approaching seventeen-year peaks; the ten-year Italian BTP has gone from 3.3 to over 3.9, nearing two-year highs. The spread over the Bund has widened, but, interestingly, less drastically than feared. The yield curve has begun an aggressive bear flattening (another common term: the yield curve flattens because short-term rates rise faster than long-term rates), with the German two-year segment moving more than the ten-year. The Schatz surpassing the Bobl is a classic sign of hawkish repricing in short-term expectations. Analysts interpret this segment as hawkish re-evaluation driven by Iran-inflation concerns. European high-yield bonds widened by about eighty basis points from February to March, compared with fifty for their American counterparts. Investors seek a premium, but there is no panic yet. It’s complicated, I admit, but as always, the old contact confirms this.<\/p>\n

On equities, the Eurotower is watching a chart of bars at two speeds with the eye of a diagnostician. The integrated utilities with a nuclear base have held up (EDF, Engie, Iberdrola), so have the LNG producers and midstream<\/em> (Shell, TotalEnergies, Equinor), the defence prime<\/em> contractors in Germany and Italy (Rheinmetall, Hensoldt, Leonardo), and the Scandinavian renewables. The losers, and they will lose more, are the German chemicals (BASF announced list price increases at the end of March), the energy-intensive steel makers, automotive<\/em> exposed to diesel, the consumer discretionary sectors in Spain and Italy, hit hardest in their purchasing power. Inside the ECB’s internal minutes, it is said in confidence that a macro<\/em> hand in Luxembourg, who sees Philip Lane and Schnabel often, the focus is shifting. The attention is now on how single sectors react to the price rises, working to understand who bears the highest costs, by how much, and how long the real effects take to surface.<\/p>\n

The real fight, though, is on currencies. The Euro-Dollar pair is the thermometer everyone watches. The cross fell from 1.2016 in January to a low of 1.1528 on 3 March; it climbed back above 1.18 on the optimism of the mid April ceasefire; it dropped back to 1.17 in mid May after Trump’s remark (“we don’t need the Strait of Hormuz open”), which sent the DXY<\/em> back above 98. JPMorgan talks of a floor at 1.15, Goldman of a year end target at 1.25. The dispersion of forecasts is the widest since 2022. The euro holds up better on a trade weighted basis than on the bilateral, a sign that the ECB is not losing competitiveness against everyone, but suffers what traders call the dollar smile<\/em>. Against sterling, which is living through a milder version of the same shock (the Bank of England under Andrew Bailey is dealing with a UK consumer price index at 3.3 heading towards five), the euro has not moved much.<\/p>\n

Against the Swiss franc the asymmetry is starker. The Swiss National Bank under Martin Schlegel, with its policy rate at zero and inflation at 0.1 per cent, is openly threatening to intervene to prevent the franc from appreciating. A policy that risks rousing Trump’s wrath: he has already slapped Switzerland with a 39 per cent tariff, which he has since brought down to 15, for alleged currency manipulation. Against the yen, the Euro-Yen cross is the most volatile in the G10. The Bank of Japan burned through 5.48 trillion yen, around 35 billion dollars, in two intervention sessions on 30 April and 1 May, to bring the rate back from 160.7 to 156; finance minister Satsuki Katayama talks of decisive action<\/em> at every press conference. Against the Chinese yuan, the euro is gaining marginal ground while Beijing, asked again in recent days by Washington, in person, to lean on Tehran for Hormuz to reopen, runs a managed exchange rate that has slowed depreciation to avoid importing fuel driven inflation.<\/p>\n

\"\"<\/a>
The ECB Tower (Photo: ECB)<\/figcaption><\/figure>\n

Through all of this, the Eurotower has one legible objective and three implicit constraints. The objective is the mandate: bring inflation back to two per cent over the medium term. The constraints are another matter. The first is financial fragmentation: peripheral spreads<\/em> and the new French fragility on the fiscal front. The second is consistency with the energy transition. Plainly, to raise rates while pretending to finance the two hundred billion euros a year of the RePowerEU2<\/em> programme is a short circuit, as Professor Bruno de Conti, a leading monetary economist in the BRICS area, and Positive Money Europe, the NGO that campaigns for the democratisation of monetary policy, have long argued. The third, in the end, is the euro’s international credibility as a reserve currency, a variable underestimated outside Frankfurt yet kept central by Schnabel’s Markets Directorate General.<\/p>\n

By mid-May, the frame stays suspended. Operation Project Freedom<\/em>, the American plan to escort civilian shipping through the Strait, has been frozen and reactivated twice; a fourteen-point memorandum is making the rounds between Washington, Tehran and Beijing without a definitive landing; QatarEnergy has declared force majeure<\/em> across the LNG chain, and Europe’s storage tanks sit at 30 per cent of capacity with the refill season just starting.<\/p>\n

On the Hafenkai in Frankfurt, at the Kaffeekommune<\/em>, at the Longobardo<\/em>, at the cheeky Pizzeria Mille Lire<\/em> (the name a wink at where it stands), or on the terrace at MainNizza<\/em>, the officials from Sonnemannstra\u00dfe go to lunch with the look of those who have seen other winters: 2008, the 2011 and 2012 of Occupy<\/em>, 2015 with Greece, 2022 with Putin. The Euro symbol nearly ended up at auction, almost relocated, but it stayed where it was: fourteen metres tall and fifty tonnes heavy, rain falling between its glowing letters, with maintenance now ensured by an agreement between the ECB, the City of Frankfurt and a dedicated fund.<\/p>\n

Anyone coming back to the cozy Westend<\/em> after twenty-six years realises, in the end, something that does not show from the outside. Lagarde’s ECB is not, cannot be, Trichet’s ECB or Draghi’s. It is an institution that has learned to manage serial shocks with instruments built for linear cycles, and that now, between Hormuz, American tariffs, Chinese fragmentation and the geopolitical cuts to cross-border banking<\/em>, is doing monetary policy on a scene that changes every week. Hegel’s Eule der Minerva<\/em>, built into the ECB, carries a new specific weight. It really does fly only at dusk, but dusk has by now lasted months. What remains, on the corner of Sonnemannstra\u00dfe, are the evening lights between the glass facades, the e-scooters<\/em> lined up, and the low constant sound of the Main, unperturbed, running beneath the Gro\u00dfmarkthalle<\/em>.<\/p>\n","protected":false},"excerpt":{"rendered":"

How the ECB has been handling the Hormuz war, so far<\/p>\n","protected":false},"author":7904,"featured_media":453770,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"episode_type":"","audio_file":"","podmotor_file_id":"","podmotor_episode_id":"","cover_image":"","cover_image_id":"","duration":"","filesize":"","filesize_raw":"","date_recorded":"","explicit":"","block":"","jnews-multi-image_gallery":[],"jnews_single_post":{"format":"standard","override":[{"template":"1","parallax":"1","fullscreen":"1","layout":"right-sidebar","sidebar":"default-sidebar","second_sidebar":"default-sidebar","sticky_sidebar":"1","share_position":"top","share_float_style":"share-monocrhome","show_featured":"1","show_post_meta":"1","show_post_author":"1","show_post_author_image":"1","show_post_date":"1","post_date_format":"default","post_date_format_custom":"Y\/m\/d","show_post_category":"1","show_post_reading_time":"0","post_reading_time_wpm":"300","post_calculate_word_method":"str_word_count","show_zoom_button":"0","zoom_button_out_step":"2","zoom_button_in_step":"3","show_post_tag":"1","show_prev_next_post":"1","show_popup_post":"1","show_comment_section":"1","number_popup_post":"1","show_author_box":"0","show_post_related":"1","show_inline_post_related":"0"}],"image_override":[{"single_post_thumbnail_size":"crop-500","single_post_gallery_size":"crop-500"}],"trending_post_position":"meta","trending_post_label":"Trending","sponsored_post_label":"Sponsored by","disable_ad":"0","subtitle":""},"jnews_primary_category":[],"jnews_override_counter":{"view_counter_number":"0","share_counter_number":"0","like_counter_number":"0","dislike_counter_number":"0"},"footnotes":""},"categories":[25705,25711,25707],"tags":[26112,29738,33338,26908],"class_list":["post-453779","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-opinions","category-world-politics","tag-bce-en","tag-ebc-en","tag-hormuz","tag-lagarde-en-2"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/posts\/453779","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/users\/7904"}],"replies":[{"embeddable":true,"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/comments?post=453779"}],"version-history":[{"count":3,"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/posts\/453779\/revisions"}],"predecessor-version":[{"id":453806,"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/posts\/453779\/revisions\/453806"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/media\/453770"}],"wp:attachment":[{"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/media?parent=453779"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/categories?post=453779"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/tags?post=453779"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}