December 5, 2020

European Central Bank head: Ready to add stimulus if needed

FRANKFURT, Germany (AP) — European Central Bank head Christine Lagarde says the bank’s massive monetary stimulus measures have helped stabilize the economy amid the pandemic and the ECB is ready to deploy even more stimulus if necessary.

Lagarde told members of the European Parliament’s economic and monetary affairs committee on Monday that “the public health crisis will continue to weigh on economic activity and poses downside risks to the economic outlook.”

She said that the bank “continues to stand ready to adjust all of its instruments, as appropriate.”

Lagarde said that the ongoing 1.35 trillion euro ($1.57 trillion) pandemic emergency stimulus — which involves the bank regularly pumping newly printed money into the economy through bond purchases — has had “a very significant impact” in stabilizing markets and the economy against the shock from the coronavirus restrictions.

Inflation, however, continues to lag far from the bank’s goal of below but close to 2%. It was minus 0.2% in August. Ongoing weak inflation prospects, along with rising infection numbers and a slowing rebound, lead many analysts to think the ECB will add more stimulus, possibly as early as its December meeting. While low inflation can benefit consumers up to a point, ongoing very low inflation can be a sign of underlying economic weakness.

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