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  • 7 August 2020, 09:19
    BOE policymaker Ramsden: Debt, higher borrowing was a necessary response to the pandemic

    • Yields in the gilt market are extraordinarily low

    • Trends over many years have pushed down rates

    • We are not actively planning for negative rates

    • We are using tried and test policies such as QE

    • Important to stress that negative rates are now in the toolbox

    • Financial structure is a key conditionality for negative rates

    • BOE can support the transition by keeping rates low

  • 4 August 2020, 09:41
    Size of ECB bond buys depend on inflation outlook, Lane says

    Reuters reports that the size of the European Central Bank’s bond purchases will depend on the inflation outlook, the ECB’s chief economist Philip Lane said on Tuesday, warning once again about “highly uncertain” economic prospects for the euro zone.

    “The overall envelope of PEPP (Pandemic Emergency Purchase Programme) purchases is a core determinant of the ECB’s overall monetary stance,” Lane said in a blog post.

    “In line with the ECB’s price stability mandate, the inflation outlook plays the central role in determining the appropriate monetary stance.”

  • 31 July 2020, 07:30
    ECB President Christine Lagarde: We have to maintain safety net at least until June 2021

    • We should envisage support continuing beyond 2020

    • We really have to maintain attractive conditions until the middle of next year at least

  • 26 June 2020, 07:40
    ECB president Christine Lagarde: We probably have passed the lowest point of the crisis, but cautious about possibility of a second wave of infections

    • Economic recovery will be sequential

    • The recovery will be a complicated matter, there is a lot of uncertainty

    • Savings grew substantially over the past two months

    • It will take a while before that translates back into investments, spending

    • Central banks have responded to the crisis in a 'massive' way

    • This crisis is worse than the 2008-09 financial crisis

    • The ECB mandate is the same i.e. focus on price stability

    • We have to use instruments that provide the most proportionate response

    • Needed to ensure that there was sufficient liquidity

    • Also needed to make sure that banks could continue lending to the economy

    • For once, monetary policy and fiscal policy worked hand in hand

  • 22 June 2020, 06:50
    BOE Governor Andrew Bailey: Would shrink balance sheet before raising rates in future

    • Massive programme of asset purchases has been the right thing to do.

    • Central bank independence should not be called into question by COVID-19.

    • Financial system mustn’t become reliant on these extraordinary levels of central bank reserves.

    • Current scale of central bank reserves mustn’t become a permanent feature.

    • Elevated balance sheets could limit the room for manoeuvre in future emergencies.

    • As economies recover, it’s likely that some of the exceptional monetary stimulus will need to be withdrawn, including by reducing reserves.

  • 12 June 2020, 08:41
    ECB's Enria urges banks to eat into capital and lend

    Reuters reports that the European Central Bank's top supervisor urged banks on Friday to eat into their capital buffers and continue lending during the coronavirus crisis, insisting the ECB would be slow in raising requirements again.

    "I hear sometimes that banks might not be willing to use the buffers because of concerns that the ECB would... ask for a fast replenishment of the buffers," Andrea Enria told a virtual meeting of bankers.

    "I want to reassure all parties that we will strive to put in place a well-designed and credible path to normality," he added.

  • 29 May 2020, 09:29
    ECB's Visco says policymakers must counter deflation risk

    Reuters reports that European Central Bank Governing Council member Ignazio Visco said on Friday policy makers had to act to head off deflationary risks brought about by the sudden halt to economic activity during the coronavirus crisis.

    Visco, who is also governor of the Bank of Italy, said disinflationary pressures could be strong and persistent, threatening economies where already high levels of public debt are growing massively during the crisis.

    Presenting the Bank of Italy's annual report, he said the ECB was ready to use all the instruments available to ensure that all sectors of the economy could benefit from accommodative financing conditions.

    "Steps must be taken to counter the significant risk of low inflation and the marked fall in economic activity from translating into a permanent reduction in expected inflation or into the possible resurfacing of the threat of deflation," he said.

    "Also as a result of the high levels of public and private debt in the euro area as a whole, this could trigger a dangerous spiral between the fall in prices and that in aggregate demand."

  • 27 May 2020, 09:20
    Stimulus will add to high debt levels but alternative is ‘much worse,’ ECB vice president says

    CNBC reports that the vice president of the European Central Bank (ECB) has backed the unprecedented stimulus packages launched in the region, saying there were no alternatives for lawmakers.

    Governments from euro area countries have passed major stimulus efforts in a bid to soften the impact of the coronavirus crisis and keep people in work. Fiscal deficits are expected to widen, debt piles will climb and the financial repercussions could be felt for generations.

    However, Luis de Guindos, the vice president of the euro zone’s central bank, said the issue of lofty debt levels needs to be put into perceptive.

    “At the end of the pandemic for sure that we will have higher public debt ratio. But the alternative of doing nothing is much worse,” he told CNBC’s Annette Weisbach when asked specifically about Italy.

    “It would be much worse in terms of the crisis. And it would be much worse in terms of the recovery phase,” he added. 

    The ECB vice chief said that concerns over public finances in the medium term will have to be addressed. But for now, he called for “powerful and strong” fiscal responses at both the national and pan-European level.

  • 27 May 2020, 07:46
    ECB president Lagarde: It is very likely that ECB 'mild' scenario is outdated

    • It is very hard to forecast how badly the economy has been affected

    • Economic contraction now seen somewhere between 'medium' and 'severe' scenario

    • ECB had to resort to exceptional measures to make sure there is plenty of liquidity

    • ECB primary objective is to ensure price stability

  • 18 May 2020, 06:19
    ECB chief economist Lane: Euro zone economy won't hit pre-crisis level until 2021 at earliest

    Reuters reports that the coronavirus-hit euro zone economy probably will not return to its pre-pandemic levels until next year at the earliest, the European Central Bank's chief economist told El Pais newspaper, adding that the ECB was prepared to tweak its tools if needed.

    "From today's perspective, it looks in any case unlikely that economic activity will return to its pre-crisis level before 2021, if not later," Philip Lane said in the interview published on the ECB's website.

    Lane said the ECB was constantly monitoring the situation and was ready to adjust all of its instruments if that proved necessary. He added that the ECB's Pandemic Emergency Purchase Programme, also known as PEPP, could be adjusted.

    He said the ECB was analysing the situation ahead of the upcoming June meeting, adding: "If we see that financial conditions are too tight, or the pressure on individual bond markets is not reflecting economic fundamentals, we can adjust the size or duration of our purchases, which we can anyway allocate flexibly over time and market segments."

  • 14 May 2020, 08:41
    ECB Economic Bulletin: Survey indicators suggest a sharp contraction in economic growth and a profound deterioration in labour market conditions

    • The euro area is facing an economic contraction of a magnitude and speed that are unprecedented in peacetime.

    • Measures to contain the spread of the coronavirus (COVID-19) have largely halted economic activity in all the countries of the euro area and across the globe.

    • Euro area GDP could fall by between 5% and 12% this year, depending crucially on the duration of the containment measures and the success of policies to mitigate the economic consequences for businesses and workers.

    • As the containment measures are gradually lifted, these scenarios foresee a recovery in economic activity, although its speed and scale remain highly uncertain.

    • The variability depends on the duration of lockdown measures, success of policies

    • Headline inflation is likely to decline further in the coming months

    • An ample degree of monetary accommodation is necessary for the robust convergence of inflation to levels that are below, but close to, 2% over the medium-term

  • 14 May 2020, 07:55
    BOJ governor Kuroda: It is not necessary to cut rates further now

    • But there is still room to cut rates further if needed

    • BOJ will not hesitate to ease further if needed

    • BOJ has many tools, measures to deploy if needed

    • Does not think that price target will be met soon

    • BOJ may have to continue easing in the coming years

    • Financial system remains stable

  • 12 May 2020, 09:56
    ECB Governing Council member Kazimir: European Court of Justice has sole authority over ECB actions

    • EU governments are not matching the ECB's efforts

    • EU fiscal response to the crisis is inadequate

    • Not opposed to increasing PEPP size, but decision should be based on data

    • No urgency to increase purchases, must examine how easing of lockdown measures are impacting the economy

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