— Lagarde cites some “divergence of views” over policy stance
By Laurie Laird
LONDON (MaceNews) – The ECB will extend its accelerated pace of asset purchases despite a sharp upward revision to growth prospects, but President Christine Lagarde signaled some disagreement amongst rate setters about the appropriate policy stance.
“There was some divergence on particular aspects” of monetary accommodation, said Lagarde, briefing the media after Thursday’s Governing Council meeting. “There was a debate on the pace” of purchases under the Pandemic Emergency Purchase Programme.
“The Governing Council expects net purchases under the PEPP over the coming quarter to continue to be conducted at a significantly higher pace than during the first months of the year,” according to a statement released after the meeting, reiterating the stance adopted at the April gathering. The ECB will purchase €1.85 trillion under the facility, but repeated that the envelope “need not be used in full,” and can “be recalibrated” should financing conditions warrant an adjustment.
The accelerated pace comes despite a sharp upward revision to economic forecasts. The ECB expects GDP to expand by 4.6% this year, up from the 4.0% predicted in March, and by 4.7% in 2022 (compared to the March projection of 4.1%. Inflation is likely to average 1.9% in 2021, up from the previously-forecast 1.5%, dropping back to 1.5% in 2022 (compared to the earlier prediction of 1.2%).
Lagarde no longer views economic risks as tilted to the downside but admitted that the council “did debate whether it was right” to term risks as “broadly balanced.”
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Contact this reporter: laurie@macenews.com.
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