The governor of the Bank of Spain, Pablo Hernández de Cos, has warned that, given the "fragility" of the economic recovery, "there is no room for complacency" and, therefore, "a significant monetary stimulus" must be maintained until it is "solid".
Likewise, it has indicated that "a premature withdrawal" of measures in the face of the crisis would suppose "damages that exceed the possible costs in the medium term of maintaining them" and it has not ruled out that they must be increased depending on the evolution of the pandemic.
At a Deusto Business Alumni meeting in Bilbao, Hernández de Cos has analyzed the role of monetary policy in the face of the "unprecedented disturbance" that the Covid-19 pandemic has meant.
After reviewing the main measures implemented by the European Central Bank (ECB) to alleviate the economic consequences of the health crisis, he warned of the "fragility" of the economic recovery and has indicated that "there is no room for complacency" in the current situation, so that it must "maintain a significant monetary stimulus until the recovery is solid."
"We are also willing, and this has been emphasized by the Governing Council, to recalibrate the measures that we have already introduced or to introduce new ones if necessary to fulfill our mandate of price stability, which must always be understood symmetrically", has stated.
As he noted, "it is absolutely crucial to maintain flexibility in the execution of asset purchase programs to avoid financial fragmentation problems."
The Governor of the Bank of Spain has stressed that "this is what to expect" from the ECB, but also from the rest of economic authorities, whether national or European.
As indicated, "they must also understand that, given the uncertainty about the future evolution of the pandemic and, therefore, about the strength of the economic recovery, it is essential to maintain stimulus measures now in a more selective and more focused way, because It is not affecting all sectors and population groups in the same way. "
Along these lines, he warned that "a premature withdrawal of these measures would cause damage to the productive fabric of the euro area and potentially to our financial system that exceeds the possible medium-term costs of maintaining them over time."
Nor does he believe that the possibility can be ruled out that, depending on the evolution of the pandemic and its economic impact, "even these measures would have to be increased if necessary".
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