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Lagarde reiterates need for timely ratification of own resources decision


European Central Bank (ECB) President Christine Lagarde confirmed that the ECB would maintain its very accommodative monetary policy stance. The Governing Council will continue to conduct net asset purchases under the pandemic emergency purchase programme (PEPP) and expects purchases to be conducted at a significantly higher pace than during the first months of the year.

Lagarde said that the eurozone still had a long way to go before phasing out of monetary easing. She compared the situation to an economy on crutches, that has to cross the bridge of the pandemic, and in the meantime it needs two crutches, one fiscal and one monetary.

On national fiscal policies, Lagarde said an “ambitious and co-ordinated” approach remained crucial as a premature withdrawal of support would delay recovery and amplify long term scarring effects. She said firms and households would need ongoing support.

At a European level, she said the ECB Governing Council reiterated the need for a timely ratification of the own resources decision, to finalize recovery and resilience plans promptly and the need for the NextGenerationEU programme to become operational without delay. She said that this could contribute a faster, stronger and more uniform recovery and thereby add to the effectiveness of monetary policy in the eurozone.