The ECB Can Still Do More to Help Europe
As coronavirus recovery remains uncertain, the central bank would be wise to expand its asset-purchase scheme.
Looking toward recovery.
Source: picture alliance
The European Central Bank announces on Thursday whether it will take more steps to counter the pandemic’s economic shock. As euro-zone countries continue to reopen, there is still much uncertainty around the risk of a second wave of Covid-19 and what shape the recovery will take. So the ECB would be wise to err on the side of caution and continue supporting the bloc by expanding its asset-purchase scheme.
The monetary union is still reeling from the sharp decline in activity that occurred in the spring. The euro zone’s composite Purchase Manufacturing Index, encompassing all sectors, hit 31.9 in May, up from April but well below the 50 mark that separates contraction from expansion. The unemployment rate in Germany climbed to 6.3% in May — its highest level in four years. In Italy, employment fell by 274,000 between March and April, as the inactivity rate (the proportion of the population out of the labor force) rose from 36.1% to 38.1%.