ECB’s Panetta: Policy support to remain in place well beyond end of pandemic

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European Central Bank (ECB) Executive Board Member Fabio Panetta said on Tuesday that they must resist the temptation for less monetary policy accommodation, as reported by Reuters.

Additional takeaways

“We will need to keep going until we see inflation sustainably reaching 2%, in an environment of robust growth and rising employment.”

“Policy support will have to remain in place well beyond the end of the pandemic.”

“Risks of providing too little policy support still far outweigh the risks of providing too much.”

“By keeping nominal yields low for longer, we can provide a strong anchor to preserve accommodative financing conditions.”

“We must establish the credibility of our strategy by demonstrating that unwarranted tightening will not be tolerated.”

“We should not hesitate to increase the volume of purchases and to spend the entire PEPP envelope or more if needed.”

“Inflation increase is temporary.”

“The near-term growth outlook is also skewed downward.”

“Eventually, a firm commitment to steering the euro area yield curve may allow us to slow the pace of our purchases.”

“Steepening in the nominal GDP-weighted yield curve we have been seeing is unwelcome and must be resisted.”

“Lower real yields would provide welcome additional stimulus, given how far we are from full capacity and the subdued level of current and expected inflation.”

Market reaction

The shared currency remains under modest bearish pressure after these remarks. As of writing, the EUR/USD pair was down 0.15% on the day at 1.2030.

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