Brussels (Brussels Morning) According to most of the 80 or so economists polled by Reuters, the new policy package prepared by the European Central Bank (ECB) will have little or no effect on the eurozone’s pandemic-afflicted economy.
The ECB has increased its pandemic emergency purchases by 500 billion euro, to 1.85 trillion euro. However, the majority of the polled economists hold that the bloc’s economic outlook remains poor, with average predictions for first-quarter growth having dropped to nearly half of what the previous poll predicted.
Little impact on economy
The economists’ consensus was that the eurozone economy contracted 2.5% last quarter, and is expected to grow 0.6% this quarter. A similar poll of economists in December last year predicted a 1.1% growth in the first quarter of 2021.
Even though a number of economists believed the ECB’s latest policy moves could provide a significant boost, over 70% of those polled said it would have little impact on the eurozone economy.
Monetary policy ineffective
“Interest rates are already so low and policy is ultra-loose, so for now, monetary policy cannot impact investment or consumer demand,” Christoph Weil, senior economist at Commerzbank, declared.
The ECB decided to increase its bond-buying programme in December last year, taking the total monetary stimulus to more than 3 trillion euro. The bank also extended the programme to at least March 2022, noting that it is open to making further adjustments should they prove necessary.