Lagarde: Financial Incentives Cannot Be Ended

European Central Bank (ECB) President Christine Lagarde said, "Monetary and financial incentives cannot be ended until full recovery in the economy is achieved."

European Central Bank (ECB) President Christine Lagarde answered questions at an event organized by the Reuters news agency. Lagarde made some evaluations on the effects of the coronavirus epidemic on the economy, public incentives and the Eurozone economy. Stating that it is still "openly" dealing with the economic and health crisis caused by the epidemic, Lagarde pointed out that the banks remained intact in this crisis, but that more bankruptcies may be seen in the coming period. Emphasizing that the Eurozone economy is still standing with monetary and financial incentives, Lagarde noted that these incentives cannot be stopped until the economy is fully recovered. ECB President Lagarde said, "Think of a patient who came out of a deep crisis but still has two crutches… Supports are needed for recovery in the economy." Lagarde described the adaptation of the households to the crisis environment as “impressive” and stated that recovery in tourism-based economies may take longer. Stating that the financial incentives of the USA in the medium term will increase the gross national product (GDP) in Europe by 0.3 percent, Lagarde said that the inflation spillover effect originating from the USA is also 0.15 percent. ECB President Lagarde said, "They are far from turning inflation into a sustainable target, the spillover effect originating from the US will be felt heavily next year."