ECB's Lane says current lockdown will lead to economic acitivy drop, but not as sever as earlier in the year
European Central Bank chief economist and board member interview with French media, Les Echos
- Compared to the lockdown in spring, these measures are less harsh.
- So the impact is likely to be less severe this time. However, the situation can change very fast, from one day to the next. This makes it extremely difficult to make any precise estimates of the impact. What does seem certain, however, is that the situation will not materially improve in the last weeks of 2020.
- Until the vaccine is fully rolled out we remain in a period of uncertainty.
- We don't think we are at the lower bound; we do think there is room for further cuts in the future. That's why we continue to say that we expect rates to be at their current or lower levels until inflation has returned robustly to where we want it to be. We still believe lowering interest rates is a viable option. But we have to decide which instruments are currently the most effective. So far, we've been indicating that the pandemic emergency purchase programme (PEPP) and the targeted longer-term refinancing operations (TLTROs) have been very effective.