ECB’s Panetta: Economic activity still well below pre-coronavirus crisis levels

In an interview with La Repubblica newspaper on Monday, the European Central Bank (ECB) Executive Board Member Fabio Panetta said that the economic activity is still well below pre-crisis levels.

Additional quotes

On the basis of our projections, we won’t see a return to those levels before the end of 2022.

By end of 2022, we estimate measures decided since march - purchase programmes and refinancing operations - will produce a cumulative increase of 0.8 percentage points in inflation and 1.3 percentage points in GDP.

We’re seeing a normalization of the cost of financing the economy, which is a necessary condition to prevent the crisis intensifying.

Asked if eurozone out of danger, it’s too soon to declare victory.

Recent data certainly indicate that we’re making progress but they don’t give us sufficient grounds for satisfaction.

Until we’re sure that the effects of the crisis have been reabsorbed, we will need to go on providing a strong monetary stimulus to consolidate the recovery, thus bringing the inflation level back up.

PEPP programme is working well, and I don’t see any economic reasons to change our decisions or actions.

If the recession were to persist, banks would have to cope with a sharp deterioration in credit and resurgence of impaired and bad loans. We need to kick-start the economy quickly, before that happens.

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