ECB’s Lagarde sees rapid rebound as vaccinations take off
The euro zone economy is set for rapid growth in the second half of the year as the deployment of coronavirus vaccines surges and life starts to return to normal, European Central Bank President Christine Lagarde said.
Less than a quarter of the bloc’s population has received their first shot so far and much of Europe is still in economic lockdown as the immunisation campaign is progressing painfully slowly.
But vaccine supply bottlenecks are expected to ease in the coming months and the key issue will be whether governments can overcome the logistical challenge of distributing the shots as fast as they come in.
“By all accounts it seems that (by) the end of June, about 70 per cent of the population should be vaccinated at least with the first jab,” Ms Lagarde told an online event of the Aspen Security Forum.
Some private forecasters are less optimistic but there is broad consensus that 70per cent of the euro zone’s adult population could be fully vaccinated by the end of the summer if logistical hurdles are overcome.
Ms Lagarde added that while the third wave of the pandemic poses downside risks to growth in the near term, vaccines provide the “light at the end of the tunnel,” so there is no reason to give up the ECB’s projections for 4 per cent growth over the full year.
The ECB has bought around a trillion euros worth of debt since the start of the coronavirus crisis to keep borrowing costs low and Ms Lagarde, along with ECB board member Isabel Schnabel, repeated her commitment to keep financing conditions favourable.
Speaking in a separate Twitter Q&A, Ms Schnabel also dismissed criticism that the ECB has not fulfilled its March pledge to boost bond purchases .
“Preserving favourable financing conditions shifts the focus from quantities to prices – the conditions at which sovereigns, firms and households can receive funding,” she said in response to a question.
“Monthly volumes vary, as we continue to buy flexibly according to market conditions,” she added.
She also said that the ECB’s tools could be recalibrated as the bank transitions from crisis fighting to supporting the post-pandemic economy.