FRANKFURT AM MAIN (Reuters) – The European Central Bank has no reason to implement new stimulus measures yet, as possible disruptions associated with the recent surge in coronavirus cases have already been factored into the regulator's policy, said ECB executive board member Isabelle Schnabel.
With the number of new infections approaching their early highs, some European countries are again imposing restrictive measures, raising expectations that the ECB will be forced to expand its already generous emergency bond buying program by 1.35 trillion euros ($ 1, 6 trillion) to help governments deal with the situation.
But Schnabel appears to have softened those expectations and even downplayed concerns about the recent strengthening of the euro, which some analysts fear could automatically undermine the ECB's stimulus efforts.
“We are seeing a re-increase in the number of infections, but at this point it is unlikely that we will see full blockages again,” Schnabel said in an interview.
“This is exactly what we assumed in our baseline scenario in June.”
“If you look at the data coming in, it is broadly in support of the baseline scenario … (and) as long as the baseline remains in place, there is no reason to adjust the monetary policy stance,” Schnabel said, pointing including the size of the emergency program for buying up government bonds, or PEPP.
As the eurozone economy was in free fall in the spring, the ECB had to act immediately, buying out record amounts of debt to keep borrowing costs low and providing more than € 1 trillion in loans to banks at negative interest rates.
The full text of the interview in English is available here:
($ 1 = 0.8410 euro)
(Balash Koranyi, Frank Siebelt, translated by Olga Devyatiarova. Editor Marina Bobrova)