ECB’s Vasle: Still Need Comprehensive Monetary and Fiscal Support

11 June 2021

By David Barwick – FRANKFURT (Econostream) – Substantial monetary and fiscal policy support is still necessary to ensure favourable financing conditions, European Central Bank Governing Council member Boštjan Vasle said Friday.

In a statement issued in his name by the Bank of Slovenia, which he heads, Vasle said that against the backdrop of an improved health situation, ‘a strong acceleration of economic activity is expected for this year, with strong economic growth expected to continue in the year ahead.’

However, he said, ‘comprehensive supportive monetary and fiscal policies are still needed to maintain favourable financing conditions and, as a consequence, to ensure a solid recovery and a sustained convergence of inflation towards our target.’

Vasle cited high-frequency data as reason to expect economic activity to pick up speed sharply. Risks remain elevated but are more broadly balanced with respect to growth and ‘even in favour of slightly higher price growth in the case of inflation’, he said.

‘The euro economy's recovery from the pandemic is still at an early stage, but it is still accompanied by high risks associated with the evolution of the epidemic and, consequently, macroeconomic developments’, he said.

The Governing Council thus decided to maintain asset purchases ‘at the elevated levels of the second quarter’, he said. ‘This volume of purchases will further support the recovery and put it on a firmer footing, while ensuring that favourable financing conditions are maintained and all the necessary flexibility is maintained.’