ECB’s Centeno: Monetary and Fiscal Policy Support Crucial, Must Be Preserved

14 April 2021

By David Barwick – FRANKFURT (Econostream) – The combined support of monetary and fiscal policy has been essential for Europe’s economy and must be maintained, European Central Bank Governing Council member Mario Centeno said Wednesday .

In opening remarks made at the Eurofi High Level Seminar and posted to the website of the Bank of Portugal, which he heads, Centeno said that the ECB’s goal was to preserve favourable financing conditions for all economic sectors.

‘It is our duty to make sure that no sector is left behind, and that viable firms will have the necessary support’, he said.

‘Going forward, we expect economic activity to recover gradually, supported by a continuation of the strong and decisive policy response and the rollout of the vaccination process’, he said. ‘The joint impact of the monetary and fiscal policies has been crucial and has to be preserved.’

Centeno cautioned against a ‘generalized backtracking in monetary policy’ in favour of ‘fine-tuning the monetary policy instruments or suggesting a more relevant role for other policies’.

Absent the ECB’s strong policy response to the crisis, ‘the materialization of a disruptive scenario would be more likely’, he said. ‘The potential trade-offs we now face seem quite limited when compared to the welfare losses that we would have incurred in such scenario.’

‘The same applies for fiscal policy measures’, he added. These should ‘proceed and be adapted’ keeping in mind the possibility of a more targeted impact, he said.