The ECB Will Adopt Further Incentives If Necessary

The ECB Will Adopt Further Incentives If Necessary

The European Central Bank (ECB) has pledged to get the eurozone out of recession. If necessary, for example if the euro strengthens too much, it can take further monetary stimulus, Fabio Panetta, a member of the ECB's Executive Board, said on Monday. The ECB eased monetary policy even more last week as the euro area economy contracted again in the current quarter. However, statements made by ECB President Christine Lagard at a press conference following the Governing Council's decision that the ECB did not need to use the full amount of approved incentives raised doubts about the bank's commitment. "We can guarantee our commitment to support recovery," Panetta said. "We are prepared to adjust all our instruments if the downside risks to the outlook materialize, including those stemming from exchange rate dynamics." The euro is currently at its highest level in 2.5 years against the dollar, which may slow both exports and the recovery of inflation. "There is no doubt that the ECB will not accept inflation at levels that are inconsistent with its target," said Panetta, who is seen as one of the biggest supporters of the ECB's extremely loose monetary policy. Panetta also called on European leaders to use the European Union's (EU) € 750 billion stimulus package wisely, as it could increase growth by 1.5% by 2026.