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Raising pace of bond buys not off the table for ECB

ECB Chief Economist Philip Lane said in a French newspaper that the European Central Bank could still increase bond purchases at its June meeting. And this is also when such a move is needed to keep borrowing conditions favourable.

Before 2023, he also said unemployment is not expected to return to its pre-pandemic level. From both the ECB and governments it is a long process that requires a sustained effort. Le Monde quoted Lane said that they can increase or decrease their purchases depending on what is necessary to keep financing conditions favourable. Their overall commitment is to maintain favourable financing conditions.

The volume of bond will be decided by the ECB. A few policymakers have called for a cut and there has been no visible push for an increase. This suggests that the choice is between maintaining the current pace or reducing the buys.

The recovery is coming later than policymakers had hoped. And so, the decision remains open, as per Lane’s comment. The bloc’s economy still needs another year to grow back to its pre-crisis size.

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