The ECB should enable governments to search out their method out of the pandemic: report from Reuters

© Reuters. ECB headquarters in Frankfurt

FRANKFURT (Reuters) – The European Central Bank needs to keep borrowing costs very low so that governments can find their way out of a pandemic-triggered recession that threatens to erode production capacity, ECB board member Fabio Panetta told a Portuguese newspaper.

“Favorable financing conditions create the best environment for an effective financial policy, which in turn creates the conditions for the private sector to take full advantage of the favorable financing conditions that we ensure through our measures,” quoted Expresso Panetta on Friday.

The ECB announced further policy easing at its December 10 meeting, stating that more emergency purchases and liquidity facilities for banks will likely be their preferred instruments.

“We can do a lot more by combining our asset-buying programs and our actions to support real economy financing through banks and the bond market,” Panetta said, adding that there should be no doubt about the ECB’s commitment to action.

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