Jul 22, 2021
European Central Bank President Christine Lagarde warned on Thursday that the rapid rise in coronavirus cases fueled by the Delta variant of Covid-19 was “a growing source of uncertainty” for the euro area economy.
“The recovery of the euro area economy is on track,” Christine Lagarde said at a press conference. “But the pandemic continues to cast a shadow, especially as the Delta variant is a growing source of uncertainty.”
The rise in contamination, due to this variant, could slow down the recovery “in services, especially in tourism and hotels,” she added.
These uncertainties support the ECB in its decision to maintain its accommodative monetary policy.
“We must preserve favorable financing conditions for all sectors of the economy during the time of the pandemic. This is essential for the current rebound to turn into a sustainable expansion and to offset the negative impact of the pandemic on the epidemic. ‘inflation,’ insisted Christine Lagarde after a meeting of the board of governors.
During this meeting, the ECB maintained its key rates at their historic low and all of its exceptional support system for the economy.
It also indicated that it did not anticipate a hike in its historically low rates before seeing the outlook for “lasting” inflation reach the bank’s new target set at 2%.
“The economy of the euro zone is rebounding strongly. But the outlook continues to depend on the evolution of the pandemic and the progress of vaccination,” said Christine Lagarde.
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