ECB Governing Council member Martins Kazaks said in an interview that the PEPP emergency asset purchase program would still end as scheduled in March, despite Omicron.
“At the current moment, we don’t know how the omicron variant will develop,” Kazaks said. “Unless it spills over into significant and large negative revisions to the outlook for growth, I don’t see that March — which the market has been expecting for some time and which we’ve been communicating in the past — should be changed.”
“At the moment we simply know too little about omicron,” he said. “I see it important to remain data-driven and make our decisions step by step. So react to the data, rather than preempt decisions when uncertainty is way too high.”
“If in February we see that it’s painful then of course we can change our views and that’s the issue of flexibility,” he said. “In my view, it’s possible both to restart PEPP or increase the envelope if it turns out to be necessary.”
On inflation, Kazaks said, “to exactly what level will it land in 2023-24, of course, there’s lots of uncertainty.” Nevertheless, “my baseline remains that it slides to below 2%.”
