ECB chief economist: Europe is facing a difficult quarter

Europe is facing a difficult second quarter as the number of those infected with the new coronavirus rises again and governments return to lockdown. However, the European Central Bank (ECB) will do what is needed to keep debt service costs at a record low. The chief economist of the ECB, Philip Lane, said this on Tuesday. Fearing that rising debt service costs would jeopardize the recovery of the euro area economy, the ECB announced in early March that it would significantly increase the volume of bond purchases under its PEPP program in the second quarter. However, the ECB's activity is already increasing. According to the latest data from Monday (March 22), the ECB increased the volume of asset purchases by almost 50% compared to the previous week. According to Reuters, the ECB bought bonds worth 28 billion euros in all its programs last week. Compared to the previous week, this means a growth of 48% and at the same time the highest volume since the beginning of December. Under the PEPP program, it purchased bonds worth EUR 21.05 billion, which represents a growth of 50% compared to the previous week. "It will be a very long quarter," Lane told CNBC, referring to a growing number of new cases of infections. Vaccination rates in euro area countries are too slow and governments need to prolong and, in some cases, tighten measures to slow the spread of the new coronavirus. The lockdown is being extended in several countries until the second half of April, signaling a further postponement of the onset of economic recovery. Regarding the published data on last week's increase in bond purchases by the ECB, Lane does not attach much importance to this, as there may be large differences in the weekly data. However, he added that in the long run, the ECB will consistently significantly increase purchases.