— ECB President Denies New Language Toward PEPP Programme Reflects More Hawkish Attitude
By Laurie Laird
LONDON (MaceNews) – ECB warnings that it may not expend all of its emergency bond buying do not represent a more hawkish outlook toward the eurozone recovery, according to Europe’s top central banker.
The rate-setting Governing Council raised eyebrows following last week’s policy meeting, noting that it could maintain “favourable financing conditions” without exhausting the “envelope” of its Pandemic Emergency Purchase Programme “over the net purchase horizon of the PEPP.” The Council increased the programme by €500 billion to €1.85 trillion at its December meeting, expanding the programme until at least the end of March 2022.
However, the new language “is not a new development by any account,” said ECB President Christine Lagarde, addressing a virtual World Economic Forum event on Monday. “There has been no particular change in that respect … . The envelope can be smaller, but it can be larger. There is no way we can know that in our minds,” she added.
ECB Chief Economist Philip Lane also referred to the possibility smaller-than-allocated PEPP purchases at a separate online event earlier on Monday.
President Lagarde reiterated her forecast that “growth for Q4 is going to be negative,” with undefined implications for the first quarter of 2021. “It’s still about crossing that bridge to the recovery. The journey is delayed, but not derailed.”
Address the same event, German Economics Minister Peter Altmaier deflected questions over the European Union’s investment treaty with China, signed at the end of last year over the tacit objections of the U.S. “I think it was not a mistake,” he said, adding that the pact replicates “a lot of arrangements that the U.S. already has with China.”
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Contact this reporter: laurie@macenews.com.
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