Europe Facing Difficult Quarter But ECB Will Do Its Part: ECB's Lane
- Europe is facing a difficult second quarter as coronavirus infections rise and governments re-impose lockdown measures, but the European Central Bank will do its part to keep borrowing costs ultra-low, ECB chief economist Philip Lane said on Tuesday.
- Fearing that rising borrowing costs would derail the recovery, the ECB earlier this month promised to ramp up bond purchases to keep yields low. Figures published on Monday showed its buys of mostly government bonds were already up by half in the week since that decision.
- "It's going to be a long quarter," Lane told CNBC in an interview, pointing to high and rising COVID-19 infection numbers. "It's a contest between progress and vaccinations and other medical progress versus the near-term challenge of trying to get this virus under control."
- Vaccination campaigns have been painfully slow across the 19-country eurozone and governments are now extending, and in some cases tightening, lockdown measures well into April, pointing to a further delay in recovery.
- Lane added that governments, which play a vital role in financing the economy, needed to reflect on the adequacy of their response, particularly in light of the U.S. government's $1.9 trillion stimulus package, which shifted the debate on the issue.
- European officials are increasingly under fire for what is seen as an underwhelming fiscal response to the crisis, leaving Europe as a top laggard among advanced economies in the recovery.