ECB economist Lane speaking
ECB's Lane chief economist is speaking. Says:
- Expect about half of the cumulative decline in output in the 2nd quarter to be reversed in the 3rd quarter
- resurgence and infection rates is posing renewed challenges
- current monetary policy strategy review exercise provides an excellent opportunity to revisit the strategic underpinnings of our monetary policy
- It is nice we have returned towards the pre-pandemic inflation path
- we have to ensure that our monetary policy stance is appropriately calibrated in order to ensure timely and robust convergence to our medium-term inflation aim
- the temporary nature of the PEPP means that the forward guidance is connected to the pandemic
- a less costly and more prudent approach is to add sufficient extra monetary policy accommodation to boost inflation momentum toward the upper region of the "BCDE" zone, in order to reconnect to the pre-pandemic inflation path
- our forward guidance represents a strong commitment to keep financial conditions at highly accommodative levels
- for guidance acts as an automatic stabilizer through the adjustment of monetary policy expectations
- accept a longer period of long patient not desirable
- a less costly and more prudent approach is to add sufficient extra monetary policy accommodation to boost inflation momentum
- once back at pre-pandemic inflation path, must ensure that policy stance ensures timely and robust convergence to target
- these weeks are critical for confidence
- in the near term we need a forceful fiscal response
