Philip R. Lane: Interview with the Financial Times
Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Martin ArnoldA pandemic recession is unique because a lot of the decline in output results from public health measures.
Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Martin Arnold
- A pandemic recession is unique because a lot of the decline in output results from public health measures.
- When these measures are lifted and the virus is contained, you should expect to see a very large recovery.
- Once we get better control of the virus we should expect to see most of the economy just go back to normal.
- There can be exceptions, though, such as the question of office work versus working from home.
- By this I mean the airline industry and the hotel industry, whether business travel or tourism, which have taken a big hit.
- It will probably take time for those sectors to go fully back to normal in terms of their financial capacity.
- In this context, you might be more optimistic about inflation dynamics, even if the pandemic itself is definitely a severe negative.
- What percentage of output could be permanently lost after we come out of the pandemic?
- Our staff projections published last week foresee that euro area GDP will have recovered to 2019 levels by mid-2022.
- It is not like the global financial crisis, where there were many years of lost output.
- And again, you can be quite extensive in policy support because its only for a relatively short period of time.
- That said, it is relevant that the euro area has 20 fiscal policies, the 19 national ones and the common fiscal element.
- You need ways to demonstrate that people should believe that you will deliver your target over the medium term.
- But what is true is that in addition to the single monetary policy, other measures are needed.
- You cant just have one policy lever, and I think we learnt that in the previous crisis years to great regret.