Fees are pending as ECB Chiefs anticipate lockdown easing
The European Central Bank (ECB) has revised its desire to minimize borrowing costs across the eurozone, suggesting that it will continue to increase bond purchase rates until the EU is on its path to recovery.
The bank confirmed through a press conference on Thursday that it had “decided to reconstruct its highly institutional monetary policy stance.” The ECB said after the meeting and in a statement that “the received information confirmed the joint assessment of funding conditions and the inflation outlook implemented at the March Monetary Policy Conference.”
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Therefore, “The Governance Council hopes that purchases under this quarter (Pandemic Emergency Purchase Program) will continue to take place at a much higher pace than in the first few months of the year,” the statement said.
The deposit rate was stable at -0.5% as the ECB reaffirmed its position that it would expand its 1.85 tonne emergency bond purchase program or not fully utilized. That decision will depend on the progress of your efforts to support the recovery of output and inflation.
Containment measurement
The bloc is getting hurt as EU countries deploy measures to curb infection rates. However, vaccination rates are moving faster in many countries. So, if restrictions are eased next month, economists expect a strong recovery.
Speaking at a press conference after the announcement, ECB President Christine Lagarde said: “While global demand and substantial fiscal stimulus recovery support global and eurozone activities, the short-term economic outlook remains clouded by uncertainty about the pandemic.”
“Advances in vaccination campaigns that allow for gradual easing of containment measures should pave the way for solid rebound in economic activity during 2021,” Lagarde said.
The risk of drawbacks
According to Lagarde, risks surrounding the growth outlook for the eurozone continue to be on the downside, but the risks over the medium term are more balanced. The ECB president also said that the outlook for global demand is better, strengthened by substantial fiscal stimulus, and advances in vaccination rollouts are encouraging.
“On the other hand, the ongoing pandemic, including spread spread of viral mutations, and the impact on economic and financial position, will continue to be a source of negative side risk,” Lagarde added.
