Christine Lagarde doesn’t touch anything. For now This was announced by the European Central Bank after the meeting of its governing council: monetary policy remains as it is despite the second wave of the pandemic and the new confinements in the eurozone. Of course, the ECB affirms that, based on its December forecasts, it will update its assessment of the situation and readjust its measures.
The ECB warns of the weakness of the European banking sector and calls for a bad bank for bad loans in the EU
“The recovery is losing momentum faster than expected due to the increase in COVID-19 cases,” Lagarde said: “All data points to a worsening in November due to the containment measures that are being taken against the pandemic. We do not expect good data for November. The ECB was for the first wave [con su programa de compras de deudas y activos por valor de 1,35 billones] and it will be in the second wave. ”
“In the current environment of risks,” says the ECB, “information, including the evolution of the pandemic, the outlook for vaccines and the evolution of exchange rates, will be carefully evaluated. The new round of macroeconomic projections prepared by the experts The Eurosystem in December will allow a comprehensive reassessment of the economic outlook and the balance of risks. Based on this assessment, the ECB will realign its instruments, as appropriate, to respond to the situation and ensure that financing conditions remain favorable for support economic recovery and counteract the negative impact of the pandemic on inflation. ”
Lagarde has also insisted on the need for European recovery funds, which are in the negotiation phase with the European Parliament, to be launched as soon as possible.
“The resurgence of coronavirus infections presents new challenges to public health and growth prospects for the euro area and global economies,” Lagarde said: “The economic recovery in the euro area is losing momentum faster than expected, after a strong, albeit partial and uneven, rebound in economic activity during the summer months. The increase in COVID-19 cases and the associated intensification of containment measures are weighing on activity, constituting a clear deterioration in the short-term outlook. Indeed, while activity in the manufacturing sector has continued to recover, activity in the service sector has visibly slowed. Although fiscal policy measures are supporting households and businesses, consumers are cautious in light of the pandemic and its ramifications for employment and income. ”
The President of the ECB explained that “ll real GDP in the euro area contracted by 11.8% quarter-on-quarter in the second quarter of 2020. After the low of April 2020, the euro area economy recovered sharply. strength in the third quarter, accounting for about half the contraction in the first half of 2020. Recent data, survey results and high-frequency indicators point to a significant weakening of economic activity in the last quarter of the year. economic evolution continues to be uneven in all sectors. Looking ahead, although the uncertainty related to the evolution of the pandemic will probably slow down the strength of the recovery of the labor market and of consumption and investment, the economy of the The euro should continue to be supported by favorable financing conditions and an expansionary fiscal policy. ”
Meanwhile, the ECB has decided to keep interest rates unchanged, to continue with the pandemic emergency purchase program (PEPP) with a total allocation of 1.35 trillion euros. “These purchases help to relax the general tone of monetary policy and offset the downward impact of the pandemic on inflation”, states the ECB: “Purchases will continue to be made flexibly over time until at least the end of June 2021 and, in any case, until it deems the crisis phase of the coronavirus over “. The Governing Council of the ECB “will reinvest the principal payments of the maturing securities acquired in the PEPP until at least the end of 2022”.