European Central Bank President Christine Lagarde cautioned Wednesday against an immediate economic impact from a Covid-19 vaccine, while also giving more details about what the central bank is likely to do next.
“While the latest news on a vaccine looks encouraging, we could still face recurring cycles of accelerating viral spread and tightening restrictions until widespread immunity is achieved,” Lagarde said at the ECB Forum on Central Banking.
Speaking Wednesday, Lagarde suggested the central bank is likely to cut borrowing costs for banks further, as well as adjusting its pandemic-related asset purchase program.
“In the weeks to come we will have more information on which to base our decision about this recalibration, including more evidence on the success of the new lockdown measures in containing the virus, a new set of macroeconomic projections and more clarity on fiscal plans and the prospects for vaccine rollouts,” she said.
“While all options are on the table, the PEPP (Pandemic Emergency Purchase Program) and TLTROs (targeted longer-term refinancing operations) have proven their effectiveness in the current environment and can be dynamically adjusted to react to how the pandemic evolves. They are therefore likely to remain the main tools for adjusting our monetary policy,” Lagarde also said.
Her remarks come mostly in line with analysts’ expectations ahead of the December meeting. At the moment, analysts believe that further rate cuts are “unlikely,” but ECB’s Knot did not exclude that possibility.
Reference: CNBC, SDW.ECB.EUROPA.EU
Thai
Eng