The European Central Bank and euro-area governments shouldn’t remove support from the region’s economy before seeing clear signs that a recovery is underway, President Christine Lagarde said.

“We have to take the economy through the pandemic and into a recovery phase, which has now started,” she said in an interview with Politico published Monday. “We need to really anchor the recovery. We always talk about inflation anchoring and we are not oblivious to that. But the recovery needs to be firm, solid and sustainable.”

Lagarde and her colleagues pledged last week to continue bond-buying at a faster pace through the third quarter, even as staff raised their forecasts for the euro-area economy. The ECB now sees risks for the region’s outlook as “broadly balanced,” a term used for the first time since December 2018.

New ECB Forecasts

Economic output and inflation predictions boosted for 2021 and 2022

Source: European Central Bank

Asked whether net buying under the pandemic emergency purchase program could come to a halt in March 2022, as currently planned, Lagarde pointed to its flexibility and better economic prospects.

“Our projection, and the design of the PEPP as we have it, seems to be heading in the right direction,” she said. “But as stated previously, it is far too early to debate these issues.”

Her Governing Council colleague Robert Holzmann, who heads the Austrian central bank, took a different stance just over an hour after the interview was published though. He told Bloomberg Television that he expects the program to end by March unless there is another severe wave of virus infections.

“It’s too early to talk about tapering,” he said, but the latest design of PEPP “was established and voted for to end by March 2022, and for the time being, if nothing changes in the sense that there is no fourth or fifth confinement, it will end.”

Lagarde also said she hopes her institution’s strategy review will conclude toward the end of the summer, but added that “whether it is at the end of the summer or in autumn is less important than the quality of the review and the solid consensus.” The review has been underway for the last one and a half years after being disrupted by the pandemic.

Source: Union of Arab Banks website