ECB to focus on returning inflation to aim – Panetta
The European Central Bank’s (ECB) monetary policy conducted during the coronavirus pandemic managed to “avert liquidity and credit crunch” and can now focus on “returning inflation to our aim,” member of its Executive Board Fabio Panetta said on Tuesday.
Panetta noted the institution’s measures enabled banks to “keep credit flowing to households and businesses” and made its policies “more powerful.” He added, however, the results are “not satisfactory yet,” as the ECB predicts the Eurozone’s budget deficit will “widen to 8.8% of gross domestic product (GDP) in 2020” and the inflation will “rise to just 1.3% in 2022.”
“Our monetary policy response to the pandemic has removed adverse tail risks, preserved very accommodative financial conditions in all parts of the euro area and leveraged complementarity with other policies. But the macroeconomic situation remains fragile and uncertain and the projected inflation path is still clearly short of our aim,” he concluded.
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