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ECB says 'ample stimulus' still necessary
THE European Central Bank defended its huge pandemic stimulus package on Thursday and said it expected to have to use the full amount of planned debt purchases to help the eurozone stay afloat during a lockdown-induced recession.
Tackling the biggest economic collapse in living memory, the ECB is buying massive amounts of debt and paying banks to lend out its cash in an effort to salvage the bloc's economy until Europe is ready to reopen after the Covid-19 lockdowns.
ECB president Christine Lagarde told a news conference that results so far showed that its package was working and that further "ample stimulus" was needed to counter high uncertainty around efforts to combat the virus and mitigate the economic impact. "Unless there are significant upside surprises, our base line is that we will need the entire envelope of PEPP," she said of the 1.35 trillion euros (S$2.15 trillion) worth of planned debt purchases in its so-called Pandemic Emergency Purchase Programme (PEPP). "It's effective, adequate and it's working," she said.
Earlier, the ECB Governing Council kept policy on hold after a recent string of more positive economic data that followed a double-digit fall in output in the three months to June. This means that the ECB remains on track to buy up to 1.35 trillion euros worth of debt through next June under its PEPP and up to 1.8 trillion euros if other purchases are also included.
ECB policymakers are also keeping up the pressure on European Union leaders to finally agree on long-delayed fiscal support, thus reducing the burden on monetary policy alone. "It is important for European leaders to quickly agree on an ambitious package," Ms Lagarde noted on the eve of a Brussels summit where leaders will attempt to bridge national differences on a new 750-billion-euro scheme of EU grants and loans. REUTERS