ECB Governing Council member Klass Knot said today that recent positive economic data confirmed that a recovery is on the way. He said “recent data solidified the confidence in our baseline scenario”. However, “even in that baseline scenario, economic activity will only approach the pre-Corona 2019 level by the end of our projection horizon, at the end of 2022.”
Separately, Executive Board member Yves Mersch said “we would not need to make use of the full PEPP envelope if the governing council were to assess that market tensions had eased sufficiently.””We are mindful that the size of our balance sheet. The significant stock of acquired assets and reinvestments of the maturing principal payments can have implications for market functioning and price formation,” he added. “The sheer size of the PEPP also goes beyond its primary backstop function by providing additional support to the monetary policy stance.”
