“If necessary, willing to spend more”

“If necessary, we will spend more.” European Central Bank President Christine Lagarde reiterated in an interview with Cnbc, that “the PEPP is fully flexible” and added that “less spending” could be achieved. He explains that on the eve of the last board meeting, “we have witnessed rapid, unwanted and unwanted growth in sovereign yields.” Hence the decision to reaffirm that the European Central Bank “does not want the risks of tightening financial conditions to threaten the recovery”. “The markets get it,” he concluded. Regarding future moves, Lagarde explained that future “tapering”, or the easing of the European Central Bank’s budget, “cannot be discussed on the same terms as the United States.”

“It is difficult to compare the stimulus measures launched by Europe and the United States: we have automatic stabilizers as well as national programs,” he stresses, and highlights, however, how the interventions between the two sides of the Atlantic are very different. “They are programs that have been developed in different ways: in Europe, we are thinking about digitization and green transition, while the first package voted in the United States is demand oriented.” He pointed out that “if we put the recovery plan and the multilateral plans of the European Union, I think we will reach 2200 billion dollars,” compared to 1900 billion from the first package supported by the Biden administration. But specifically in the recovery, Lagarde called again “to accelerate ratification: countries have a few weeks to ensure that the first resources arrive in the second half of 2021”.

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“The recovery is postponed but not derailed: In Europe we still have lockdown measures that slow the economy, but we see the light at the end of the tunnel even if it is not yet within reach.” He asserts that “in the second half of 2021 we will have a faster recovery”, while assuming for the current year that inflation “may reach 1.5%.”

Thelma Binder

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