FAST FIVE: Watch Live: Lagarde Explains How Europe Will Recover Despite Surging Euro
Watch Live: Lagarde Explains How Europe Will Recover Despite Surging Euro Lagarde is now speaking live: Here are the highlights so far (her full prepared remarks can be found here): Lagarde says risks to growth outlook still tilted to the downside, but less pronounced Incoming data suggest that the resurgence of the pandemic and containment measures, resulted in a decline of activity in Q4, and will weigh on activity in Q1 2020 (in line with ECB baseline) Economic developments continue to be uneven Consumers remain cautious Weaker corporate balance sheets, and uncertainty, is weighing on business investment It will take time for widespread immunity to be achieved Medium-term recovery should be supported by expansionary fiscal stance, favourable financing conditions, and returning demand Headline inflation seen rising in months ahead (energy, VAT in Germany), but underlying price pressures expected to remain subdued due to weak demand Recovery will support inflation in medium term; market based measures have increased slightly ECONOMY Inflation remains very low in the context of soft demand, and short-term risks are the downside due to COVID; sees protracted weakness in inflation Incoming data confirms the previous baseline The pandemic poses serious risks and disrupting activity, manufacturing is holding up, but services is being severely curbed, output likely to have contracted in Q4 Stimulus remains essential, uncertainty remains high Risks to growth outlook still tilted to the downside, but less pronounced (Reiteration from December) Medium-term recovery should be supported by expansionary fiscal stance, favourable financing conditions, and returning demand Headline inflation is seen rising in months ahead (energy, VAT in Germany), but underlying price pressures expected to remain subdued due to weak demand FX ECB will continue to monitor developments in the exchange rate MONETARY POLICY Reiterates statement language that the PEPP envelope might not be used in full; can also be adjusted higher if needed GLOBAL DEVELOPMENTS ECB sees mixed economic developments across different countries Brexit is positive; December projections assumed no agreement between the EU/UK – as are recovery fund developments New US President lifts some uncertainty, which she says is a positive Negatives include pandemic worsening in many countries, lockdowns extended, and new COVID variant that could require more stringent measures ahead * * * Earlier As previewed earlier, and as expected, the ECB kept its stimulus steady after the December boost to asset purchases.
Below is the full text of the ECB announcement: The Governing Council decided to reconfirm its very accommodative monetary policy stance.
Third, net purchases under the asset purchase programme (APP) will continue at a monthly pace of €20 billion.
The Governing Council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry.
The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.