Lagarde says ECB will explore all options to support economy

by BLOOMBERG

The European Central Bank “will do everything necessary” to protect the euro-area economy from setbacks related to the coronavirus, including expanding on the emergency stimulus measures it announced this week, President Christine Lagarde (picture) said.

“We are fully prepared to increase the size of our asset-purchase programs and adjust their composition, by as much as necessary and for as long as needed,” Lagarde wrote in an op-ed published Thursday in a range of European newspapers including the Financial Times. “We will explore all options and all contingencies to support the economy through this shock.”

The comments came less than 24 hours after the Frankfurt-based institution announced its largest-ever annual spell of bond buying to help the 19-nation euro bloc counter economic repercussions from the coronavirus. The ECB added 750 billion euros ($820 billion) on top of its existing asset purchases, and said it will consider raising self-imposed limits on asset holdings should that be needed.

“The ECB will ensure that all sectors of the economy can benefit from supportive financing conditions that enable them to absorb this shock,” Lagarde added.

While Governing Council members were unanimous that they needed to act to calm market turmoil as the coronavirus pandemic hits the economy, there were some reservations about the implications of the program, according to people familiar with the matter. Some policy makers are concerned about raising the 33% limit on how much debt can be held by any particular issuer.

Lagarde repeated that the option would be considered if needed.

“We will do everything necessary within our mandate to help the euro area through this crisis, because the ECB is at the service of the European people,” she said.