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MNI BRIEF: Brussels SGP, ECB Reviews Should Be In Parallel

Senior Brussels officials calls for fiscal rules and ECB strategy to be in parallel to ensure correct policy mix.

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The upcoming reviews of the EU Stability and Growth Pact and ECB strategy should be done "in parallel" to ensure the right policy mix, EC Economic Affairs Commissioner Paolo Gentiloni. He also called for fiscal policy to continue playing a macroeconomic stabilisation role supporting euro area policy mix while ECB monetary policy remains constrained, adding that a permanent EU fiscal capacity as the best way of protecting the bloc from economic shocks.

Gentiloni said the escape clause from the EU's Stability Pact should be deployed more readily in downturns given the constraints of the zero bound on ECB monetary policy. "when it comes to fiscal support at the current juncture, the risks of doing too little outweigh the risks of doing too much," he said.

The EU review on the fiscal pact is expected to be finished by June, MNI has been told.