ECB’s Lagarde: Commitment to Favourable Financing Conditions ‘Crucial’

8 February 2021

By David Barwick – FRANKFURT (Econostream) – The European Central Bank’s commitment to ensuring favourable financing conditions is crucial, ECB President Christine Lagarde said Monday.

In her introductory statement at the plenary session of the European Parliament, a text of which was posted to the ECB’s website, Lagarde said this commitment was ‘crucial’ in reducing economic uncertainty and thus supporting spending and investment. ‘A more solid recovery is a precondition for re-anchoring inflation around its pre-pandemic path’, she said.

Once the currently high uncertainty and the pandemic containment measures disappear, she said, supportive policies and rising demand will underpin the recovery.

Vaccination ‘provides the eagerly awaited light at the end of the tunnel’, she said, though the public health situation remains ‘a significant downside risk’.

Though inflation would likely rise in the months ahead, weak demand and wages in tandem with a strong euro would probably suppress underlying price pressures, she said.

As before, Lagarde stressed the importance of monetary and fiscal policy working ‘hand in hand’. The latter ‘should be targeted and focused on the measures that are most conducive to economic growth’, she said.

The Next Generation EU support package, if implemented as planned, ‘could even boost growth as early as this year’, she said.