Lagarde 'totally committed' to supporting Europe through coronavirus recession
Trent Murray in Frankfurt
As much of Europe battles to contain a resurgence of COVID-19, the European Central Bank chief has said she is ready to bolster financial support to help soften the economic blow of the crisis.
Speaking at the European Central Bank's Forum on Central Banking, the organisation's President, Christine Lagarde, said the unprecedented crisis had caused experts to rethink the conventional wisdom around economic downturns.
"The deliberate shutdown of the economy triggered by the COVID-19 pandemic has produced a highly unusual recession," she said
"It has infiltrated and crippled sectors that are normally less sensitive to the economic cycle. In a regular recession, manufacturing and construction are typically hit harder by the cyclical downturn, while services are more resilient. But during the lockdown in the spring, we saw the reverse.”
As Europe struggles with a resurgence of COVID-19, Lagarde said the ECB remained ready to respond to the economic fallout of fresh lockdowns.
"The second wave of COVID-19 presents new challenges and risks, but the blueprint for managing it is the same. The ECB was there for the first wave and we will be there for the second wave. We are, and we continue to be, totally committed to supporting the people of Europe," she said.
The ECB Forum on Central Banking is an annual event organised by the European Central Bank and is ordinarily held in Sintra, Portugal. But due to the current health crisis, the conference was held virtually this year.
The gathering brings together central bank governors, academics and financial market representatives to discuss the current challenges and opportunities within the global banking system.
Alongside ECB President Christine Lagarde, this year's event also includes Bank of England Governor Andrew Bailey and the Chair of the US Federal Reserve, Jerome Powell.
Cautious optimism for the future
The ECB President also said while there's growing hope a vaccine will soon be ready for distribution, it's unlikely to lead to a sudden rebound of Europe's ailing economy.
"While the latest news on a vaccine looks encouraging, we could still face recurring cycles of accelerating viral spread and tightening restrictions until widespread immunity is achieved," she said.
"So the recovery may not be linear, but rather unsteady, stop-start and contingent on the pace of vaccine roll-out. In the interim, output in the services sector may struggle to fully recover."