Insight - ECB enters tricky phase in crisis response

Economic outlook: People walk near ECB headquarters in Frankfurt. The ECB’s economic projections – which assume a ‘medical solution’ to the virus in mid-2021 – include huge variability, covering three scenarios from mild to severe. — AFP

BATTLE lines are being drawn at the heart of the European Central Bank (ECB) over whether to add monetary support soon to head off any economic slowdown, or wait for stronger evidence that it’s needed.

Executive Board member Fabio Panetta raised the prospect of a preemptive burst of stimulus last week when he said “the risks of a policy overreaction are much smaller than the risks of policy being too slow or too shy.”