The European Central Bank's governing council should further increase monetary accommodation to potentially avoid problems of market fragmentation giv
The European Central Bank’s governing council should further increase monetary accommodation to potentially avoid problems of market fragmentation given a worsening outlook for both economic activity and inflation, ECB policymaker Pablo Hernandez de Cos said on Monday.
With the euro zone likely heading back into recession this quarter, the ECB has already said it would provide more stimulus in December, most likely through its pandemic emergency bond buying programme and through more favourable loans to the bank sector.
ECB chief Christine Lagarde said last week that this would be mainly be based on fresh emergency bond purchases and subsidies to banks via loans at negative interest rates.
Meanwhile, ECB governing council member Mario Centeno called on European governments on Monday to provide more focused support to the coronavirus-battered economy, prioritising investment projects already under way that would benefit both companies and workers.
“Debt levels make massive support prohibitive. We need to be more demanding than before and the support measures have to focused … and temporary,” Centeno told a conference in Lisbon.
ECB policymakers have been cautious despite the prospect of an effective vaccine against COVID-19, warning over the past days that, though this is a source of relief, the euro zone is still set to suffer from new curbs on economic activity to combat a rise in infections.