Economic news

ECB Member Hints at Scaling Back Stimulus

European Central Bank member Jens Weidmann has said the massive coronavirus stimulus program should be scaled back “step-by-step,” but others are worried about a premature lifting of the measures. It is the big question on the ECB’s table: when to lift the pandemic emergency purchase program — known as PEPP, which is currently set to last until March 2022 and total 1.85 trillion euros ($2.2 trillion). The ECB could choose to end it before or after this estimated date. Market players have wondered about the same question off the back of stronger economic data in the euro area.

“I see two prerequisites for completely ending net purchases under the PEPP,” Jens Weidmann, a hawkish member of the ECB and governor of the German central bank, said at the Frankfurt Euro Finance Summit on Monday, according to CNBC translation. These would be the total removal of Covid-19-related restrictions, such as social distancing and a solid economic recovery, he added. However, the path of the pandemic is uncertain and, despite strong economic data in recent weeks, there are concerns that a premature lifting of the stimulus would undermine the economic recovery even further.

The ECB’s main policy target is to keep inflation below but close to 2%. Though the region has struggled to revamp inflation in the wake of the global and sovereign debt crises, it recently experienced a massive increase in prices. Inflation in the euro zone rose to 2% in the month of May, slightly above the ECB’s target. This has been linked with the easing of different social-distancing rules across the 19-euro nations and consumers’ willingness to spend more.

Source: FXPro

To leave a comment you must or Join us

More news

Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree