The European Central Bank could end its program related to the pandemic emergency (PEPP) in less than a year, while modifying the application of its tools to support the eurozone economy. Francois Villeroy de Galhau, Governor of the Bank of France, speaks.
“We could end the PEPP by March 2022,” the governor said Wednesday in an interview with Bloomberg Television. “It wouldn’t mean a sudden tightening of our monetary policy, reinvestments under the PEPP would go on. We could also make asset purchases under our other program.”
“Our monetary policy should remain accommodative for years to come, but our mix of instruments could evolve,” Villeroy said. “We could also do asset purchases with our other program, APP, perhaps somewhat modified, and we would have the full range of what I call the quartet of our instruments.”
The “quartet” Villeroy refers to consists of:
– Asset purchases
– Negative interest rates
– Forward guidance
All this would allow “a possible exit by March 2022, but with a quartet of instruments that allow us to conduct an accommodative monetary policy,” continued Villeroy, however, a decision has not yet been made.
ECB President Christine Lagarde said Wednesday that the economy will require support from policymakers “during the recovery.”