MNI BRIEF: Many Finance Condition Measures in Place: ECB Lane

Preserving favourable financing conditions "throughout the pandemic period" is the best way the European Central Bank can achieve its monetary policy aims and policymakers have a wide range of measures to gauge the current conditions, chief economist Philip Lane said Monday, as he highlighted the importance of the decline in the equilibrium real interest rate as a future challenge for monetary and fiscal policymakers.

The ECB's pandemic emergency programme (PEPP) had proved particularly effective and efficient at ensuring critical middle and long-end segments of the yield curve component of overall financing conditions remain appropriate, Lane said. But considerable uncertainty about the dynamics of the pandemic and associated containment measures in many countries remains, he added, representing "significant" downside risk and requiring the prolongation of fiscal support measures.

Lane called the launch of vaccination campaigns a "milestone in the eventual resolution of the pandemic health crisis, even if there is only cloudy visibility of the calendar towards sufficient immunity to enable the restoration of normal economic activity."