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The second wave of coronavirus might delay Europe's restoration: ECB President Lagarde

The current surge in the COVID-19 pandemic in Europe could delay the eurozone economic recovery due to the impact of containment measures by governments across the region, European Central Bank President Christine Lagarde said in an interview on Tuesday.

– "Instead of this [recreational] V-shape that we all long for and hope for, we fear that the second arm of the V is getting a little wobbly," she said in an interview with the CEO of the Wall Street Journal Advice.

– Lagarde reiterated that the ECB is ready to “use all the tools to achieve the most effective, efficient and proportionate result”, if it takes into account the relevant economic situation. This could mean that the key rate is even lower than the current minus 0.5%.

– Industrial production in the euro area increased by 4.1% in July compared to the previous month, but was still 7.7% lower than in July 2019, according to the latest data from the statistical office of the European Union, Eurostat. In September, inflation in the euro zone was down 0.3% annually, a long way from the ECB's official target of "below but close to 2%".

– The ECB's job of boosting inflation is made more difficult by the continued appreciation of the euro this year. The common currency was up 5.5% against the US dollar
EUR USD,
+ 0.22%,
and more than 7% against the pound
EURGBP,
+ 0.16%
since January.

Read: The two-year high of the euro is driving the ECB to buy more bonds

The outlook: Despite significant stimulus plans adopted by national governments across the region since March and topped off by a massive € 750 billion joint EU recovery fund, the ongoing recovery could stall without major new fiscal and monetary measures . If governments reach the political and financial limits of their ability at national or EU level, the central bank will again be obliged to do everything possible to prevent another weakening recession in the region.

Opinion:How Mario Draghi's "Whatever It Takes" became Europe's antivirus mantra

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