ECB’s Lane: Summer Has Been in Line with Our Baseline Scenario

27 August 2020

By David Barwick – FRANKFURT (EconoStream) – Eurozone economic activity over the summer months has been consistent with the European Central Bank’s central scenario of the recovery, ECB Executive Board member Philip Lane said Thursday.

In an interview with CNBC, Lane, who is also Chief Economist of the ECB, said that the ECB had assumed all along that the recovery would not follow a smooth path, being subject to recurrent challenges associated with new outbreaks of the pandemic.

‘What we’ve seen over the summer is more or less in line with our baseline projections’, he said. 3Q would see ‘quite a strong growth rate’, he said, ‘… but the reality is that while we still have to manage this virus in terms of social distancing and other restrictions, there’s not going to be a return to normal levels of economic activity for a considerable period.’

Asked whether a resurgence of Covid-19 cases was making him more pessimistic, Lane responded that the ECB had envisioned ‘that it was not going to be the case that the dynamic of managing the pandemic would be perfectly linear, where progress is made and maintained.’

It is important to handle outbreaks quickly and to avoid widespread lockdown measures, he said.

Lane did not take the opportunity to feed speculation about the ECB’s next move or in particular the outcome of its next monetary policy meeting on September 10.

‘We signalled all along that we’re absolutely standing ready as needed, so we’ve made a lot of policy moves between March and June and we stand ready to do more as needed’, he said.

Within the ECB’s mandate, he said, ‘I would not be concerned about the room for action. We can definitely step up as needed.’