The European Central Bank will this week face more questions about an increasingly challenging outlook only a month after it unleashed fresh stimulus to bolster the euro zone economy
FILE PHOTO: The headquarters of European Central Bank is photographed n Frankfurt, Germany, January 14, 2021. REUTERS/Kai Pfaffenbach/File Photo
ECB chief Christine Lagarde is sticking to forecasts for an economic rebound this year so long as lockdown measures to curb the pandemic are lifted by end-March and vaccines distributed. Markets will therefore closely scrutinise the ECB’s assessment of the balance of risks and will want a sense of whether more stimulus is likely this year.Policymakers debated a smaller increase in emergency bond purchases last month and were keen to emphasize that they may not spend the full quota.
While welcome signs for inflation, a weak economy will continue to weigh on prices. Analysts note that the U.S. reflation trade can also explain rising euro zone inflation expectations.