ECB's Lane: In a severe scenario, GDP would fall by 12% in 2020
Comments from the ECB's chief economist:
- We must ensure our monetary stance provides sufficient accommodation and guards against the escalation of tail risks
- We are fully prepared to further adjust our instruments if warranted
- Options including increasing size of PEPP and adjusting its composition, as much as necessary
- APP and PEPP estimated to compress the term premium by around 80 bps on 10 year
The ECB is in a battle to convince the world (and German courts) that it has the power to stem the decline in the economy and the long-term problems in the eurozone.