of 2021
The ECB holds its first meeting and press conference of 2021 on Thursday 21st January against a backdrop of heightened stimulus and a warning for governments to not to be too hasty when retightening their post-lockdown belts.
Christine Lagarde, ECB President, has warned to avoid against reacting swiftly against any improvement in economic conditions this year if inflation starts to bite. Speaking on Wednesday 14th January, Lagarde predicted a rebound due to “pent up demand” but said this wouldn’t be enough to warrant a major readjustment in monetary policy as this could lead to serious risks.
The pandemic has led to a sharp rise in household savings across Europe with a corresponding drop in services activity like restaurants, holidays and trips to the cinema. This has contributed to downward pressure on prices precipitated by lower energy costs and VAT cuts in countries like Germany. As such, the ECB inflation rate dropped in the negative in the final months of 2020.