ECB Debates How to Get Back to the Future After Virus: Eco Week
Added 04-18-21 02:04:02am EST - “(Bloomberg) -- Europe's late but accelerating vaccination push is allowing monetary officials to begin pondering an economic future free of the curse of the coronavirus.While European Central Bank policy makers will reiterate existing…” - News.yahoo.com
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Europe’s late but accelerating vaccination push is allowing monetary officials to begin pondering an economic future free of the curse of the coronavirus.
While European Central Bank policy makers will reiterate existing emergency stimulus settings with a horizon of March 2022 when they meet by video this week, the step-up in immunizations across the region has emboldened some of them to start a public discussion on what might happen when the pandemic no longer menaces the euro region.
There’s a spectrum of views on that outlook. Dutch central bank Governor Klaas Knot favors tapering crisis bond purchases as soon as the third quarter, while his French colleague, Francois Villeroy de Galhau, cites March as a possible end date. President Christine Lagarde reckons monetary support will be needed “well into the recovery.”
ECB officials know only too well that weaning financial markets off emergency stimulus is a fraught task. For now, they have the comfort of knowing that they still have time before any winding down of stimulus needs to begin, and in the meantime they can look across the Atlantic for a guide to the pitfalls.
The Bank of Canada has already hinted that it might be one of the first Group of Seven institutions to start paring back monetary policy support. At the central bank’s next decision on Wednesday, officials may announce slower bond purchases, a policy shift that their counterparts in Frankfurt can only dream of for now.
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