European Central Bank (ECB) is preparing to exit its emergency measures in June, when the economic fallout from the crisis unleashed by the pandemic could be starting to fade.
Any talk now of phasing out the ECB’s Pandemic Emergency Purchase Programme (PEPP) would be “premature,” said ECB President Lagarde on a press conference, stating that the ECB governing council did not even discuss the programme’s future at this week’s meeting.
But after an economic downfall in the first quarter as a third wave of infections engulfed the eurozone, Lagarde expects economic growth to resume during the current quarter.
According to European Union’s statistics office Eurostat, annual inflation in the eurozone rose from 0.9 per cent in February to 1.3 per cent last month, thanks to a strong pickup in energy costs. This is very important for ECB strategy in particular, as ECB will also be focused on projections for inflation in the next months. The ECB’s annual inflation target is 2 per cent.
Lagarde is due to unveil a new round of eurozone economic growth and inflation projections in June, which could point to what she said would be “a firm rebound” in the 19-member currency bloc during 2021.
The euro hit all-day high of 1.2070 dollars while she was speaking.
“We still have a long way to go before we cross the bridge of the pandemic and the economic recovery is sustained,” the ECB chief said. “I have referred to the economy as being on crutches.”
A large part of the eurozone population could also be vaccinated by the ECB’s June 10 meeting.
However, Lagarde warned at her press conference that the eurozone economy is unlikely to return to pre-crisis levels until the second half of 2022.