ECB minutes reflect concerns over the economy and the euro
At their 10 September meeting, officials at the European Central Bank (ECB) pleaded to keep a “free hand” in combatting the economic slump triggered by the coronavirus pandemic and insisted they were willing to expand support measures if necessary, according to minutes from the latest meeting. The minutes show that the ECB was more concerned about the economy and the resulting uncertainty than suggested by Christine Lagarde at the press conference that followed the meeting. The strengthening in the euro, which is mentioned more than 20 times, seems to have been a major point of discussion, and ECB members are more concerned about the pace of its increase than its level. Officials provided a long list of risks likely to slow economic growth: “In this regard, the underlying dynamics of the pandemic, developments in negotiations on the post-transition Brexit arrangement, the outcome of the US presidential election and decisions on fiscal plans at the individual country level as well as at the euro area level had to be closely monitored.”
“The case was made for keeping a ‘free hand’ in view of the elevated uncertainty, underpinning the need to carefully assess all incoming information, including the euro exchange rate, and to maintain flexibility in taking appropriate policy action if and when needed,” the ECB said in its accounts of the September 9-10 meeting. Most economists expect the ECB to prolong and expand its Pandemic Emergency Purchase Programme (PEPP) in December from its current amount of €1,350bn.