Join Moneyweb for a post-budget webinar with Dr Adrian Saville, Dr Iraj Abedian, Sizakele Marutlulle and Dr Azar Jammine for further insights on Wednesday, 28 October at 15h30.

Lagarde says ECB will act if needed

As pandemic burdens economy.
Image: Hollie Adams/Bloomberg

The European Central Bank is ready to deploy more monetary stimulus to aid the recovery if needed as the pandemic damps prospects for the economy, according to President Christine Lagarde.

Addressing European lawmakers on Monday, Lagarde called the recovery across the 19-nation euro zone uncertain and incomplete, with consumers cautious to spend and companies reluctant to invest.

Moneyweb Insider INSIDERGOLD

Subscribe for full access to all our share and unit trust data tools, our award-winning articles, and support quality journalism in the process.

ONLY R63pm

Choose an option:

R63 per month
R630 per year SAVE R126

You will be redirected to a checkout page.
To view all features and options, click here.

A monthly subscription is charged pro rata, based on the day of purchase. This is non-refundable and includes a R5 once-off sign-up fee.
A yearly subscription is refundable within 14 days of purchase and includes a 365-day membership.

Click here for more information.

“The public health crisis will continue to weigh on economic activity and poses downside risks to the economic outlook,” Lagarde said in a video conference with members of the European Parliament’s Economic and Monetary Affairs Committee. The Governing Council “continues to stand ready to adjust all of its instruments, as appropriate.”

Resurgent coronavirus infections are threatening new restrictions, jeopardizing the economic progress made since lockdowns earlier this year plunged the region into a deep recession.

Policy makers have started to stake out their positions ahead of a discussion on whether the ECB should add support to nurture the economy. Most economists predict the 1.35 trillion euro ($1.6 trillion) emergency bond-buying program will be expanded this year — probably in December when new economic forecasts are published.

The ECB said earlier this month that the recovery is in line with its baseline projections. Yet some of the most recent surveys have shown that while manufacturing is still improving, services are shrinking again.

One of the most worrying consequences for ECB officials — including recently Executive Board member Fabio Panetta and Bank of Spain Governor Pablo Hernandez de Cos — is flagging inflation. The annual rate of consumer prices fell below zero in August for the first time in four years.

Lagarde said headline inflation in the euro area is expected to remain negative over the coming months — in part due to a stronger euro. Preliminary inflation data for September are due on Friday.

“The Governing Council will carefully assess all incoming information, including developments in the exchange rate, with regard to its implications for the medium-term inflation outlook,” Lagarde said.

© 2020 Bloomberg

COMMENTS   1

You must be signed in to comment.

SIGN IN SIGN UP

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: