FRANKFURT (Reuters) – Europe is facing a “marked” economic decline this quarter but fresh stimulus measures from the European Central Bank need to reflect how markets have changed since the spring, ECB board member Isabel Schnabel told German newspaper Handelsblatt.
The ECB has all but promised to ramp up stimulus in December as the euro zone enters a pandemic-related lockdown for the second time this year and the debate is only about the exact nature of the measure it will use.
“The current situation differs from that in March and that will presumably be reflected in the calibration of the instruments,” Schnabel was quoted on Tuesday as saying.
“The main objective at that time was to stabilise the financial markets. By contrast, today’s financing conditions are favourable in historical terms,” she added.
A key debate could be whether to expand a 1.35 trillion euro emergency bond purchase programme or to ramp up other asset buying schemes, which are governed by more stringent rules, sources told Reuters earlier.
“After the crisis we must at some point fall back on our conventional toolbox in order to bring inflation to a rate consistent with our price stability mandate. But we’re still a long way off from that,” she said.
She also expressed concern that some banks may be tightening access to credit and argued that the downturn must not be exacerbated by the banking sector.
(Reporting by Balazs Koranyi; Editing by Bernadette Baum)