The Eurozone economy is facing a “tougher” period than in spring as the pandemic continues to heap pressure on members, according to former Central Bank of Ireland governor Philip Lane, now chief economist with the European Central Bank (ECB).
But Mr Lane has insisted in an interview with the Wall Street Journal that the ECB will be as aggressive as the United States’ Federal Reserve in stimulating the Eurozone’s economies.
There have been concerns that the Eurozone could face a double-dip recession, but the euro continues to retain gains against the dollar as investors reckon the ECB has less wriggle room to cut interest rates than the US Federal Reserve.
“The next phase is going to be tougher,” Mr Lane said.
He said the current inflation level “remains far away from our goal” of just below 2pc. The Eurozone was in deflation in September, with a -0.3pc rate.
“The big question, and this is why there is so much uncertainty, is: how quickly can the current dynamic, with rising cases, be stabilised,” said Mr Lane regarding the pandemic.
He argued that the ECB already had an inflation strategy similar to its US counterpart. “I do not see that the ECB has a structurally tighter orientation for monetary policy than the Federal Reserve,” he said.