The European Central Bank is more optimistic about the economy and currently predicts that the Eurozone will grow by 4.6% in 2021.
The European Central Bank chose to postpone the difficult decision until the beginning of the school year. At the board meeting on Thursday, June 10, it decided to keep the currency injections at the same level since the pandemic began. Internal disagreements — calls by some governors to slow down the pace of support for the economy — have not been heard.
Christine Lagarde, President of the European Central Bank, summed up her attitude with an expression: «Stable Hand» (It literally means “stable hand”). One argument is that the central bank is continuing its work to help the economy.In order to allow countries to fund themselves during this “whatever it takes” period, since March 2020, it has launched an emergency plan to respond to the pandemic (PEPP), which aims to indirectly purchase the debts of Eurozone countries. Its total investment is 1.850 billion euros, of which 1.1 trillion has now been spent.
With the imminent economic recovery, the focus of the debate now is the gradual withdrawal of this support. In March, as interest rates began to rise, the Frankfurt institution announced that it would purchase bonds at a faster rate. “Significantly higher”From about 17 billion euros to 20 billion euros per week.This Thursday, she picked up this little sentence and announced that she would keep the rhythm “Significantly higher”.
However, the traditional hawks are not far away.MeterI Lagarde acknowledged that not all the 25 members of the council agreed. “There is a dispute about the speed of procurement. (…) There are some different opinions here and there. “ “Good that [Christine Lagarde] It conveys a message of stability and continuity, and our impression is that there are many things to do behind the scenes”Said Frederik Ducrozet, a strategist at Swiss private bank Pictet.
If the ECB’s internal debates are secret, then the hawks are well known: they come from the central banks of Germany, the Netherlands, Austria, and Finland. As early as April, Dutch central bank governor Klaas Knot publicly raised the issue of gradual withdrawal from PEPP.