ECB President Christine Lagarde said the “mild” coronavirus economic scenario is now “out of date”. She added, “we’ll have a better sense in a few days as we publish our numbers in early June, but it’s likely we will be in between the medium and severe scenarios.” Eurozone economy is expected to contract between -8% to -12%.
The central bank is expected to expand the Pandemic Emergence Purchase Program next week. Lagarde said with respect to the PEPP, “this concerns the size but also the composition and the duration of the program.” She also talked down the risk of a new debt crisis as debt-servicing costs are “extremely low”. “All countries around the world had to respond, and as a result of that had to increase their debt,” she said. In the current coronavirus crisis, “use of debt is not only recommended, it’s the way to go.”
