ECB keeps 'steady' stance, ready to adjust policy if needed Lagarde says

The European Central Bank kept all of its policy levers unchanged but did leave the door open to further easing if needed.

In her press briefing following Thursday's meeting of the ECB's Governing Council, Christine Lagarde said "a lot of uncertainty about the pandemic" remained.

Nonetheless, the situation was progressing as foreseen, with the ECB's staff having projected that Covid-19 lockdown measures would remain in place across the first quarter while vaccinations would initially proceed slowly.

ECB staff forecasts for euro area GDP of growth of around 4% in 2021 and 2022 were still "broadly valid", she said.

Hence, Lagarde indicated that the full €1.85trn envelope envisioned for the Pandemic Emergency Purchase Programme might not need to be used, although the opposite might hold true and could be increased if necessary.

Significantly, she stressed that the central bank's "compass" would be financial conditions in the euro area, which were "clearly anchored" to inflation, the monetary authority's target by mandate.

Overall, she described the ECB's assessment as "steady" but added that the GC was "ready to adjust and use all instruments in toolbox if necessary."

And at the moment, financing conditions were "broadly favourable".

She also added some colour to what the ECB meant by "pandemic period", explaining that it should be understood to mean that they would remain 'in the market' "at least until March 2022".