At a European Parliament heading, ECB President Christine Lagarde warned that “we continue to be confronted with serious circumstances, from both a health and an economic perspective…The key challenge for policymakers will be to bridge the gap until vaccination is well advanced and the recovery can build its own momentum.”
Lagarde added, ” the euro area economy is expected to be severely affected by the fallout from the rapid increase in infections and the reinstatement of containment measures, posing a clear downside risk to the near-term economic outlook.” She also reiterated that ECB will “recalibrate” its instrument on the basis of the updated economic projections and reassessments in December.
She also noted that the pandemic emergency purchase programme (PEPP) and targeted longer-term refinancing operations (TLTROs) “have proven their effectiveness in the current environment and can be dynamically adjusted to react to how the pandemic evolves.” So, they are “likely to remain the main tools for adjusting our monetary policy.”
