Fiscal expansion needed to sustain demand - ECB's Schnabel

English News 24.11.2020, 17:05
Fiscal expansion needed to sustain demand - ECB's Schnabel
Member of the European Central Bank's (ECB) Executive Board Isabel Schnabel stated on Tuesday that "significant uncertainty about future income prospects can be expected to prevail for some time" even though news about the effectiveness of coronavirus vaccines "provides light at the end of the tunnel." 
This is why fiscal expansion is "indispensable in order to sustain demand and mitigate the long-term costs of the crisis," she explained.

Schnabel also discussed the possible policy directions in light of the current low inflation in the euro area. "By accepting a somewhat slower return of inflation towards their aim, and by focusing more on the duration of policy support, central banks may effectively mitigate potential risks to financial stability arising from a more intense usage of their policy instruments in the pursuit of their mandate," she said.

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