ECB’s Vasle: Key Message of Staff Forecasts is That Pandemic’s Economic Impact Diminishing
17 December 2021
By David Barwick – FRANKFURT (Econostream) – The latest staff forecasts of the European Central Bank reflect the decreasing impact of the pandemic on the euro area economy, ECB 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 inflation would stay high in 2022, but once the reasons for this subside, it would ‘converge towards the 2% target by the end of the forecast horizon.’
The ‘key message’ of the updated forecasts ‘is that the economic impact of the pandemic in the euro area is diminishing, so that we expect high economic growth and very favourable labour market conditions this year and next’, he said.
The economic outlook is subject to high but broadly balanced risks, above all having to do with energy prices and supply chains, he said.
Vasle described the Governing Council’s decision to extend the reinvestment period of the pandemic emergency purchase period by at least a year as ‘ensuring all the necessary flexibility of the programme to address the fragmentation in the euro area linked to the effects of the pandemic.’
‘We are also ready to resume net purchases after the PEPP ends in March 2022, should this be necessary to address negative shocks linked to the pandemic’, he added.
Targeted longer-term refinancing operations (TLTROs) would after next June no longer be conducted under the current, ‘significantly more accommodative’ conditions, he said. ‘We will also consider the appropriateness of calibrating the two-tier interest rate on excess reserves.’