MNI BRIEF: No Urgency To Decide Post-PEPP Course - ECB's Lane

The euro area outlook remains well-balanced and broadly in line with official projections, ECB chief economist Philip Lane said in an interview Wednesday in which he suggested headwinds from the Covid-19 virus's next wave may be of more direct threat to the global economy than Europe's. Inflation is neither guaranteed to be as low nor as "chronically high" as some have speculated, he added.

With PEPP scheduled to end in March 2022, the ECB will use the autumn and winter period to assess whether or not the pandemic remains in its crisis phase, and will in any case continue to buy bonds via APP once PEPP has finished, Lane said. Nor, he added, is there any urgency to think about adjusting other ECB programmes such as TLTROs.

"Any adjustment we make within the pandemic period is within the single philosophy: maintaining favourable financing conditions. If this can be done with lower purchases, we'll buy less. If favourable financing conditions require more purchases, we'll conduct more purchases," Lane said.

"Our commitment to maintaining favourable financing conditions throughout the pandemic crisis phase means that the purchase decision should be viewed as an implementation issue. It's subordinated to the deeper commitment, which is favourable financing conditions."