(FILES) In this file photo taken on January 23, 2020 Christine Lagarde, President of the European Central Bank (ECB) addresses a news conference following the meeting of the governing council of the ECB in Frankfurt am Main, western Germany. – European Central Bank president Christine Lagarde warned governments on October 12, 2020 against pulling pandemic support schemes too quickly as eurozone economies struggle to recover from the coronavirus crisis. (Photo by Daniel ROLAND / AFP)
European Central Bank chief Christine Lagarde warned on Thursday that the pandemic still poses “serious risks” to the eurozone economy as concerns grow about new virus variants and sluggish vaccination campaigns.
The Frankfurt institution’s governing council held back from tweaking its ultra-loose monetary policy at its first meeting of the year, having already ramped up stimulus in December.
Lagarde stressed that “ample monetary stimulus” remained essential to steer the 19-nation currency club through the Covid-19 upheaval, and that the ECB stood ready to do more as needed.
“The pandemic continues to pose serious risks to public health and to the euro area and global economies,” she told a press conference held online because of virus precautions.
The start of mass vaccination drives in the European Union was “an important milestone”, she said, but the rollout has got off to a bumpy start in many nations.
The emergence of more contagious virus variants in Britain and South Africa has added to nervousness, at a time when many countries are already struggling to bring down Covid-19 cases.
Europe’s top economy Germany this week extended its partial lockdown until February 14, and Chancellor Angela Merkel has not ruled out border checks to slow the spread of the new variants.
France and Spain have tightened their evening curfews, while non-essential shops and leisure facilities are closed across much of the continent.
The latest virus setbacks “are disrupting economic activity,” Lagarde said, noting that the services sector was hit especially hard.
“The intensification of pandemic poses some downside risks to the short-term economic outlook,” she added.
The ECB in December forecast 3.9 percent growth for 2021, after an estimated contraction of 7.3 percent in 2020.
Lagarde said the ECB’s forecasts “remain valid” for now, as they took into account lockdowns persisting through the first quarter coupled with a gradual start to vaccination.
The former French finance minister also reiterated a long-standing plea for European governments to help support the ECB’s efforts through fiscal policy.
She called on member states to speed up the ratification of a recently agreed 750-billion-euro recovery fund, saying it had a “key role” to play in financing the regions’ bounce-back.
Euro headache
Under Lagarde, the ECB took unprecedented steps last year to cushion the impact of Covid-19 on the euro economy.
Its biggest weapon is a pandemic emergency bond-buying scheme, known as PEPP, that was in December topped up by 500 billion euros to reach a total envelope of 1.85 trillion euros. The scheme was also extended to March 2022.
The bank has also offered ultra-cheap bank loans and held interest rates at historic lows.
The goal of the measures is to keep borrowing costs low to encourage spending and investment in the 19-nation currency club, in a bid to boost growth and inflation.
But eurozone inflation has stayed stubbornly low for years and even turned negative in 2020.
By the ECB’s own estimates, price growth will gradually inch up to 1.4 percent by 2023, still far off the bank’s target of just under two percent.
In December, inflation stood at minus 0.3 percent.
Analysts say inflation could bound higher later this year, powered by pent-up consumer demand once lockdowns start easing.
But any boost is expected to be short-lived, they cautioned.
Lagarde said inflation was “likely to increase in the coming months”, partly also due to the end of a temporary sales tax cut in Germany from January.
But she said “underlying price pressures are expected to remain subdued due to low demand in tourism and travel sectors, and the appreciation of the euro against the dollar.”
The single currency has risen by more than 10 percent against the greenback since late February, complicating ECB efforts to push up inflation.
A stronger euro makes imports cheaper, keeping a lid on consumer prices, while exports become less competitive, hurting growth prospects.
Lagarde, a former International Monetary Fund chief, said the ECB was monitoring exchange rates “very carefully”.
“The currency remains a concern for the ECB as it could add to deflationary pressures and hurt the recovery,” said HSBC economist Fabio Balboni.
551583 939776Come across back yard garden unusual periods of ones Are generally Weight reduction and every 1 1 could be important. 1 way state could possibly be substantial squandering by means of the diet. lose weight 773753
577262 228323Fantastic post, I think internet site owners need to acquire a good deal from this web web site its really user pleasant. 362820
561338 433405A quite informationrmative post and lots of really honest and forthright comments made! This undoubtedly got me thinking a great deal about this problem so cheers a good deal for dropping! 766255
92076 818895Aw, it was an extremely excellent post. In thought I would like to set up writing related to this moreover – taking time and actual effort to create a extremely very good article but exactly what do I say I procrastinate alot and also no indicates manage to go done. 623981
418127 28384Thanks for another informative post. Exactly where else could anyone get that kind of information in such a easy to realize way of presentation. 528936
653371 613797Oh my goodness! a fantastic post dude. Thanks a good deal Nevertheless I will be experiencing trouble with ur rss . Dont know why Not able to sign up for it. Is there every person acquiring identical rss problem? Anybody who knows kindly respond. Thnkx 860716
939927 628111great work Outstanding weblog here! Also your web site a lot up quick! What web host are you the usage of? Can I get your associate link on your host? I want my website loaded up as rapidly as yours lol 330254
100598 264049I want to start a blog but would like to own the domain. Any suggestions how to go about this?. 715180
867619 991716Discovered your weblog and decided to have a study on it, not what I normally do, but this blog is amazing. Awesome to see a website thats not spammed, and in fact makes some sense. Anyway, fantastic write up. 271482
740438 850048great post. Neer knew this, regards for letting me know. 793838
552610 876289Bookmarked. Kindly also consult with my website. 560131
868009 573959I was searching at some of your articles on this internet site and I believe this internet web site is really instructive! Keep on posting . 721929
225342 48042a great deal lately with my father so hopefully this will get him to see my point of view. Fingers crossed! mortgage banker new york 75495
190237 277718articulo agregado a favoritos, lo imprimir cuando llegue a la oficina. 704888
695540 143233I like this website quite considerably, Its a really nice situation to read and get info . 320983
424679 839741Im not confident exactly why but this internet internet site is loading incredibly slow for me. Is anyone else having this concern or is it a problem on my finish? Ill check back later and see if the issue still exists. 116150
275686 949659There is noticeably a bundle to find out about this. I assume you made positive nice factors in options also. 926909
970233 809716This kind of publish appears to get yourself plenty of visitors. How will you acquire traffic to that? It provides a great distinctive twist upon issues. I guess having something traditional or perhaps substantial to give info on is the central aspect. 858342
880492 383617Thank you for your extremely very good data and feedback from you. san jose used car 362910
852730 631818You must consider starting an e-mail list. It would take your internet site to its potential. 134963
327787 677009Nice read, I just passed this onto a colleague who was performing some research on that. And he actually bought me lunch as I identified it for him smile So let me rephrase that: Thank you for lunch! 496306
14070 415011Basically a smiling visitor here to share the enjoy (:, btw outstanding design . “Audacity, much more audacity and always audacity.” by Georges Jacques Danton. 699588
122923 266395Billiard is a game which is mostly played by the high class people 177627
84235 630111Hey There. I discovered your blog making use of msn. That is a really smartly written post. I will make certain to bookmark it and come back to read more of your valuable data. Thanks for the post. I will undoubtedly return. 481947
650966 596770Really interesting information !Perfect just what I was searching for! 475208
638255 240848I actually appreciate your piece of function, Excellent post. 189599
838935 177404Hiya! Great weblog! I happen to be a daily visitor to your site (somewhat more like addict ) of this internet site. Just wanted to say I appreciate your blogs and am looking forward for far more! 29234
400805 37532very nice post, i certainly enjoy this wonderful internet site, persist with it 428949