The discussion about when the European Central Bank (ECB) should phase out its crisis support is getting underway again.
The governor of the Austrian central bank has indicated that the ECB’s unique emergency bond-buying program should really be ready by the end of March next year.
The ECB is currently pumping billions into the eurozone economy every month to support the recovery from the corona crisis. According to Robert Holzmann, who, as central bank head of a member state, is also one of the policymakers at the ECB, only a new serious wave of corona infections would be another reason to continue with the support longer.
Therefore, the Austrian wants to strictly adhere to the official explanation about this, which the ECB has included in its interest rate decisions in recent months. The emergency purchase program would undoubtedly be continued until the end of March next year and at least until the corona crisis is over. The institution repeated this last week.
But not everyone at the ECB thinks that conclusions can be drawn yet. In an interview, ECB President Christine Lagarde stated that she believes it is “far too early” to debate this. Last week, the ECB was already very optimistic about the eurozone’s recovery in its new growth forecasts. But then, the consensus among policymakers was also not to change monetary policy for the time being.
Another factor is that the recent strong increase in inflation is probably temporary. The fact that the overall price level in the euro area is rising sharply is partly due to oil prices. These are now rising considerably, while they plummeted hard in the comparable months last year.