ECB President Christine Lagarde told the International Monetary and Financial Committee, “in the euro area, incoming economic data, particularly recent survey results, have started to show unprecedented falls, pointing to a large contraction in output in the euro area, as well as to rapidly deteriorating labour markets.”
She added that the central bank is fully prepared to increase the size of its asset purchase programmes and adjust their composition, “by as much as necessary and for as long as needed. It will explore all options and all contingencies to support the economy through this shock” of coronavirus pandemic.
Separately, Executive Board member Isabel Schnabel said the central bank should do more to avoid financial fragmentation in the zone. And ECB “stands ready to adjust all of its instruments as needed … to avoid fragmentation that may hamper the smooth transition of our monetary policy,”
Governing Council member Gabriel Makhlouf said, “from the ECB’s perspective, as our actions have shown, we stand ready to support the citizens and economies of Europe if events show that we need to do more”. “Our focus has to be on supporting the public health response. But we also need to think about how we recover from the economic shock, and how the financial system supports the recovery, when it comes,” he added.