CHRISTINE LAGARDE WARNS STIMULUS MUST BE REMOVED ONLY ‘GRADUALLY’

The president of the European Central Bank has said the region’s economy will need to be weaned off its fiscal and monetary stimulus “gradually” to avoid repeating mistakes made in previous crises when support was withdrawn too fast. 

Christine Lagarde said there would be a “tricky situation” for policymakers to manage once the coronavirus pandemic ended and the economy started to recover, recommending a switch to “flexible support” instead of “closing all the taps at once”.

“Our commitment to the euro has no limits,” said Lagarde. “We will act for as long as the pandemic is causing a crisis situation in the euro area.”

Her comments in an interview by Le Journal du Dimanche newspaper came as economists expressed concerns that Europe’s slow vaccination rollout and delayed fiscal stimulus could cause its economy to fall further behind the US and China.

 

Source: Financial Times