The President of the European Central Bank (ECB), Christine Lagarde, speaks at a press conference on the outcome of the meeting of the Governing Council on March 12, 2020 in Frankfurt.
Kai Pfaffenbach | Reuters
Despite a difficult battle against the Covid-19 pandemic, the European Union will take its economic step later this year, European Central Bank President Christine Lagarde told CNBC on Friday.
Another wave of coronavirus cases hit several parts of the euro zone, leading officials to launch another round of shutdowns, just as other developed countries are looking to revitalize.
Lagarde admitted the lockdowns are holding back growth, but said she was optimistic that things would improve.
“Light is at the end of the tunnel,” Lagarde told CNBC’s Sara Eisen about Closing Bell. “We can see it. It’s not within range yet. We have a few more innings to go.”
She added that “it will be in the second half of the year.” [a] Recovery that will actually develop quickly. “
According to the latest projections by the International Monetary Fund, EU growth in 2021 will be 4.4%, which is roughly the average for the advanced economies but is well below the 6.4% estimate for the US. This corresponds to a year in which GDP in the EU contracted at 6.6% pace compared to -3.5% in the US
The US has been much more successful in getting vaccines up and running, and Congress has been significantly more aggressive with more than $ 5 trillion in funding, and a massive infrastructure program is still pending.
Both the ECB and the US Federal Reserve have provided strong financial support in the form of rock bottom interest rates and trillions in asset purchases.
Indeed, there have been some concerns that US policies might push inflation to undesirable levels, and Lagarde said she expected the Fed to meet its own inflation targets before the ECB.
“We are in a completely different situation,” said Lagarde. “You know, the US will likely hit its inflation targets soon. We are very far from that.”
She added that the ECB’s monetary policy approach is characterized by “complete flexibility. Flexibility over time, across asset classes and countries, and we have decided when it is necessary to expand it, and to expand it we have done it twice. “
“If there is a need to do it again, we will do it again,” she added. “If it is necessary to spend more than has been determined, we will do so. If we can spend less because the situation is improving quickly, so will we. Therefore, we will use the flexibility in every way.”
While the region has lagged behind on vaccinations, Lagarde hopes that will change. Only 14% of people living in the EU have received at least one dose, according to Our World in Data, compared to 33.5% in the US.
Lagarde said there was “very strong” determination to get that number to 70% by the summer.
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