Lagarde: The reference to Greece is a very strong signal

LAST UPDATE 16:55

The praise in Greece for the “very good progress” that has been made in the implementation of the reforms was given by the President of the European Central Bank, Christine Lagarde, speaking at the press conference after the monetary policy decisions of the bank.

Answering a question about the inclusion of Greek bonds in the regular programs of the ECB, Lagarde noted that “the criteria for the eligibility of securities are known – we buy only investment grade”.

“Greece has made very good progress in the reform programs, as we see in all the missions we do with the Commission. It has also improved its credit rating, but still [τα ομόλογα] they are not eligible “, continued the President of the ECB.

“In this context, we decided to make a special reference to Greece. This is a very strong signal and it is very rare to refer to a specific country,” he stressed.

The head of the ECB reiterated from the text of the policy decisions that the bank will remain flexible with regard to the PEPP program and specifically noted the proposal concerning Greece: “This flexibility could include the purchase of bonds issued by the Hellenic Republic in addition to the “The value of the bonds reinvested at maturity, in order to avoid the interruption of purchases in this country, which could negatively affect the transmission of monetary policy to the Greek economy, while it is still recovering from the effects of the pandemic,” he said. .

The ECB will keep all options on the table

As the broader course of monetary policy in the coming months in the shadow of the micron change and in the midst of strong inflation, the President of the ECB tried to send the message that the bank will remain flexible and keep all its options open.

“Uncertainty remains high, the micron mutation will have an impact, but also our economies are now more resilient,” she said.

At the same time, he acknowledged the inflation rally, although he noted that the ECB continues to expect de-escalation of pressures from 2022. “Inflation will remain above 2% for most of 2022,” he said. “But we expect it to decline over the next year.”

In this context, Lagarde confirmed analysts’ estimates that the bank will take a first, hesitant step in adjusting its policy, and announced the closure of markets under the emergency program to deal with the pandemic (PEPP) in March. of 2022.

At the same time, he announced the strengthening of the regular purchasing program (APP) by doubling the monthly purchases from 20 billion euros to 40 billion euros, in order to avoid any negative effects.

The forecasts of experts

The President of the ECB appeared optimistic about the economic outlook, noting that the economic recovery is expected to continue, although activity has slowed in the last quarter and this slower growth is expected to pass in early 2022. “We now expect GDP to pass “The levels were before the outbreak of the pandemic in the first quarter of 2022,” he said.

As he noted, the latest forecasts of central bank experts place annual GDP growth at 5.1% in 2021, 4.2% in 2022, 2.9% in 2023 and 1.6% in 2024.

Compared to the September forecast, the forecasts were revised downwards for 2022 and upwards for 2023 (5% in 2021, 4.6% in 2022 and 2.1% in 2023).

At the same time, the latest expert forecasts place annual inflation at 2.6% in 2021, 3.2% in 2022, 1.8% in 2023 and 1.8% in 2024 – significantly higher than the September forecast ( 2.2% in 2021, 1.7% in 2022 and 1.5% in 2023).

Excluding food and energy, structural inflation is expected to reach 1.4% in 2021, 1.9% in 2022, 1.7% in 2023 and 1.8% in 2024, figures also significantly increased by the September forecasts.

D. Stolis