COVID-19 to push euro zone economy into unprecedented peacetime slump: Lagarde

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ECB, 금리•양적완화 동결…장기대출 금리 인하

As Europe struggles to fight the coronavirus,... its central bank is rolling out a set of measures to respond to the pandemic.
This comes as the President of the European Central Bank warned that the pandemic will push the euro area economy into an economic slump of a magnitude and speed that are unprecedented in peacetime.
Kim Hyo-sun reports.
The chief of the European Central Bank is warning that the coronavirus will push the euro zone economy into an unprecedented peacetime slump,... adding that output in the 19-nation euro zone is expected to shrink by 5 to 12 percent this year.
"Growth scenarios produced by ECB staff suggest that Euro area GDP could fall between 5% and 12% this year, followed by a recovery and normalization of growth in subsequent years. The extent of the contraction and recovery will depend crucially on the duration and the success of the containment measures."
Against such a background,... the ECB Governng Council decided Thursday to leave key interest rates for the euro area unchanged while it introduced a set of new measures to respond to the COVID-19 pandemic.
Its Governing Council said the eurozone base interest rate will remain at zero percent,... with the marginal lending and deposit rates remaining at a quarter of a percent and minus zero-point-five percent, respectively.
"We decided to keep the key ECB interest rate unchanged. We expect them to remain at their present or lower levels until we have seen the inflation outlook robustly converged to a level sufficiently close to, but below 2% within our projection horizon and such convergence has been consistently reflected in underlying inflation dynamics."
The ECB also explained it will further ease conditions on the targeted longer-term refinancing operations in order to support liquidity.
These measures add to the central bank's comprehensive response to the pandemic,... which mainly includes a 820 billion dollar pandemic emergency purchase program announced in mid-March.
Italy, one of the hardest hit nations in Europe, witnessed its GDP drop by 4-point-8 percent on-year in the first quarter of the year.
Its statistics agency also said it fell 4-point-7 percent compared to the last quarter of 2019.
This was the biggest drop since current statistical records began in 1995.
Meanwhile, finance ministers from the G7 countries held a video conference on Thursday to discuss strategies to accelerate economic activity once they reopen following sweeping lockdowns aimed at containing the pandemic.
They agreed to continue coordinating "timely and effective actions" in response to the economic fallout.
Kim Hyo-sun, Arirang News.
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