“It is important that the space created by a strongly stimulative monetary policy for other economic policies is used effectively throughout the euro area, including Finland,” says Olli Rehn, Governor of the Bank of Finland.
European The monetary policy of the European Central Bank (ECB) has significantly supported the economic recovery and ensured price stability in the medium term, the Bank of Finland estimates.
“A strong stimulative monetary policy is still needed to support the economy and employment and to achieve the objective of price stability,” says the Governor of the Bank of Finland. Olli Rehn in the bulletin.
The Eurosystem, ie the ECB and the national central banks, increased emergency funding in response to the coronary virus pandemic to € 1-350 billion in June. The Eurosystem increases the money supply by buying securities on the market so that banks can increase their lending to households and businesses.
“It is important that the space created by a strongly stimulative monetary policy for other economic policies is used effectively throughout the euro area, including Finland,” says Governor Rehn.
In the euro area, public debt has increased significantly as governments have sought to protect public health and curb the economic damage of a pandemic.
Director general According to Rehn, the need for structural labor and product market reforms and investment to support economic growth has become even more pronounced.
Last week, the European Central Bank estimated that the eurozone’s GDP would shrink by 8% this year. Next year, it is projected to grow by five per cent and by more than three per cent in 2022. Gross domestic product means the total value of goods and services produced for final consumption.
The central bank estimates that the unemployment rate in the euro area will rise to 8.5% this year and 9.5% next year, but will decline to 8.8% in 2022.
The Bank of Finland emphasizes that the outlook for the global economy is still very uncertain. Nevertheless, according to current forecasts, the worst of the collapse has passed, but the recovery will take a long time.
If the coronavirus pandemic starts to escalate again towards the end of the year, the global economy could shrink by almost 8% this year and the eurozone economy by 12%, according to the OECD.
Without a further escalation of the coronavirus pandemic, the global economy would contract by 4-6% this year and the euro area economy by around 8-10% this year, according to several forecasts.
The latest data suggest that the recovery in economic activity in the euro area has been very slow since the initial upturn and the risks of a slower-than-expected recovery have increased.
The ECB has embarked on monetary policy reassessing their strategy after moving it in the spring for six months due to the crisis caused by the coronavirus pandemic.
“A reassessment of the ECB’s monetary policy strategy is all the more necessary given both the long-term low inflation and the economic damage caused by the interest rate pandemic,” said Governor Rehn.
He emphasized that the role of the central bank was to work more effectively to support the Union’s other economic policy objectives without jeopardizing price stability, in order to bring about economic recovery and improve long-term growth prospects.