BRATISLAVA (Reuters) – The euro zone economy is growing along the lines the European Central Bank projected in June, so policymakers have time to wait for more hard data, Governing Council member Peter Kazimir said on Wednesday.
The euro zone economy appeared initially to rebound quicker than expected from its pandemic-induced recession but more recent data, including a weak PMI reading suggested the recovery is flattening and the bloc could fall short of forecasts in the third quarter.
“It seems to me we are in line with the baseline scenario,” Kazimir, Slovakia’s central bank chief, told Reuters on the sidelines of a news conference. “We have room to wait for hard data, which are reliable.”
The ECB projected quarterly GDP growth of 8.3% in the third quarter and it is due to update this figure at its Sept. 10 policy meeting.
Unleashing unprecedented firepower to fight the recession, the ECB is buying record amounts of debt to keep borrowing costs down, including through a 1.35 trillion euro Pandemic Emergency Purchase Programme (PEPP).
While the ECB said this entire amount is likely to be spent on bond buys, some have argued that there was no obligation to use all the money.
“I have said in the past that once we have an appropriate response from the fiscal side, then of course we are not obliged to use the whole (PEPP) envelope,” Kazimir told reporters.
Although the ECB still bought close to 20 billion euros of bonds each week in August, these purchase volumes are off their early highs, due in part to growing market confidence and thinner volumes during the summer months.
“What we see is that the PEPP is working and it is a very appropriate response to the crisis,” Kazimir added.
(Reporting by Jason Hovet, writing by Balazs Koranyi; Editing by Hugh Lawson)