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- ECB's president Lagarde: Euro area economy could shrink by as much as a 12% in 2020
ECB's president Lagarde: Euro area economy could shrink by as much as a 12% in 2020
- Says recovery speed and scale remain highly uncertain
- Policy helps support flow of credit to companies
- Welcomes government measures
- Says continued ambitious efforts needed
- Announces new PELTROs or non-targeted pandemic emergency longer-term refinancing operations in an effort to support liquidity conditions in the euro area financial system and contribute to preserving the smooth functioning of money markets by providing and if effective liquidity backstop
- ECB expects to keep the main refinancing operation and the interest rates on marginal lending rate facility and the deposit facility at present levels or lower levels until it has seen the inflation outlook robustly converts to a level of sufficiently close to but below 2%
- Notes that ensuring monetary policy transmitted to all countries
- ECB is ready to adjust all instruments by as much as necessary and as long as necessary
- Says pandemic severely affected manufacturing and services
- Economic impact likely to even be more severe in Q2
- Growth expected to resume as containment is lifted
- Duration epidemic highly uncertain
- ECB prepared to extend PEPP for as long as needed
- Euro area GDP can fall by -5% to as low as -12%
- Expects headline inflation to drop considerably in coming months
- Virus implications for longer-term inflation highly uncertain
- Coordinated fiscal stance is critical
- Longer-term inflation expectations less affected
- More favorable TLTRO III terms should encourage lending
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