ECB President Christine Lagarde said the coronavirus pandemic could accelerate the economy’s transformation towards further digitization and automation, with shorter supply chain. The transition to new economic model will be “disruptive”. “They will probably be more disruptive in the first two years, obviously hitting employment and production,” she added.
“So the inflation dynamic will necessarily be impacted, probably with a disinflationary, deflationary aspect at first, and then an inflation dynamic.” ECB will need to keep monetary policy exceptionally loose in the mean time.
She added that ECB estimated supply chain to shrink by around 35%, with use of robots increased by 70% to 75%.
