The European Central Bank has concluded that the best support for the national economy is to stop rolling out new stimulus programs. A large number of such programs and aid packages may have a devastating influence on the European economy.
Economists have analyzed the recent official announcements made by ECB President Christine Lagarde. The analysis unveiled that the regulator was planning to alter its monetary policy or, at least, take a pause in the QE process. Economists suppose that the regulator will not cut the key interest rate despite the worsening forecasts of the economic growth in most eurozone countries. Moreover, the ECB may stop moving towards the targeted inflation of 2%. At the moment, it is focused on more serious issues. The goal is to reach reasonable financial conditions. In fact, there are a lot of factors that reflect how the local financial system contributes to economic development. Christine Lagarde said that favorable financing conditions were the new needle in the compass.
Notably, at the beginning of the coronavirus pandemic, the ECB launched an emergency purchase program (PEPP) that was expanded to a total of €1.85 trillion. At the same time, the EU authorities decided to create a €750 billion coronavirus recovery fund.
