Favorable financing conditions are essential - ECB's Lane

Thursday, 26. November 2020 13:27

European Central Bank (ECB) Executive Board member Philip Lane insisted on Thursday ensuring favourable financing conditions is essential "to support the economic recovery and counteract the negative impact of the pandemic on the projected inflation path." He added that inflation must be "reconnected" to its path before the coronavirus pandemic in order to avoid a longer phase of even lower inflation than planned, which he characterized as "costly and risky."

Lane estimated that, even once the effect of the pandemic on inflation is neutralized, monetary policy will have to ensure a "timely and robust convergence" of inflation to the ECB's medium-term aim. "Monetary policy must act both to facilitate the necessarily-expansive fiscal stance and to minimise the crowding-out of private sector activity that would occur if high levels of public borrowing were transmitted to an increase in sovereign yields," Lane added.

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