ECB Executive Board member Isabel Schnabel said the central bank is watching out for signs of credit crunch. She noted that markets are “quite resilient so far despite rising in virus infections”. But they’re “vulnerable to repricing after compression of risk premia”. “We are monitoring this very carefully, we’re looking at whether this translates into tighter credit standards and lower lending, which could also impair (ECB) policy transmission.”
Separately, Vice President Luis de Guindos said “Inflation expectations are very subdued as a result of the pandemic and some specific factors and we have to act with the tools available to us.”
