The ECB Stands its Ground Regading the FIscal Stimulus
The ECB started the PEPP programme in March, but Germans keep opposing it once again
As we know now, the European Central Bank (ECB) started a monetary stimulus programme in March, as coronavirus broke out in Europe and the lockdown started. The PEPP programme is worth hundreds of billion of Euros, which is really needed right now. But, Germans like to ruin the party every time.
The German Constitutional Court ruled against the PEPP programme from the ECB, but the ECB says that they only fall under the jurisdiction of the European Court of Justice. Yesterday we heard such comments from other ECB members, while today Kazimir is repeating ECB’s line as below:
ECB Member Kazimir Comments
- ECJ has sole authority over ECB actions
- EU fiscal response to the crisis is inadequate
- EU governments are not matching the ECB’s efforts
- Not opposed to increasing PEPP size, but decision should be based on data
- No urgency to increase purchases, must examine how easing of lockdown measures are impacting the economy
Kazimir is covering all the key topics here as he reaffirms that the ECB will stick to their current mandate with regards to the German court ruling. Then, he goes on to bash the lack of coordinated fiscal response by governments, which is also correct.
Lastly, he makes mention of the PEPP issue but notably says that there is no “urgency” to make a decision just yet. Just be reminded that the program should run through to around September/October at its current pace, so they still have some time to decide. But given the likelihood of the market growing more anxious in the coming months, I would expect them to be reaching some decision on the matter sooner rather than later.
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