Policy makers at the European Central Bank (ECB) have expressed their concerns about this.
The item is highlighted in the minutes of the ECB policy meeting at the end of April. During the summit, policy makers agreed that a scenario with only mild economic impact was no longer realistic.
A rapid economic recovery also seems to be out of the question. But it is difficult to say, according to the central bankers, how badly the blow of the corona crisis will be. This depends on many factors.
The central bank then announced additional crisis support in its interest rate decision. For example, from June onwards, the ECB uses lower interest rates for cheap loans to banks than was previously the case. In addition, new monetary operations have been launched, which will run from May to September 2021. The ECB further underlined its “readiness” to extend or extend its € 750 billion emergency buy-back program.
Some economists previously speculated that the central bank would expand its contingency buying program in April by also including junk bonds. That is debt from companies that are less creditworthy. ECB President Christine Lagarde was asked many questions about this at the press conference at the time, but did not give a straightforward answer as to whether the enlargement option had already been considered at the meeting. The meeting documents show that the ECB intends to monitor the situation for the time being and hopes to have more information available at the next interest rate decision in June.
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