European Central Bank readies to release more stimulus

Oct. 29 (UPI) -- The European Central Bank prepared Thursday to release new measures to stimulate the economy amid COVID-19 lockdowns to control a second wave.

ECB President Christine Lagarde told reporters that the second wave has posed new challenges.

"The resurgence in coronavirus infections presents renewed challenges to public health and the growth prospects of the euro area and global economies," Lagarde said in a news conference. "Incoming information signals that the euro economic recovery is losing momentum more rapidly than expected, after a strong, yet partial and uneven, rebound in economic activity over the summer months."

Lagarde added that monetary policy measures imposed since early March have helped to preserve favorable financial conditions, but the "current environment of risks clearly tilted to the downside."

In response, the ECB's main decision-making body, the Governing Council, will assess the new information on the impact of the pandemic and potential for the rollout of vaccines in the exchange rate, Lagarde said.

The Governing Council will have new large-scale economic projections, including factors such as interest rates, in December, according to Lagarde.

The decision-making body will use the December projections "to respond to the unfolding situation and to ensure that financing conditions remain favorable to support the economic recovery and counteract the negative impact of the pandemic on the projected inflation path," Lagarde said.

The ECB "has clearly indicated its intention to provide more support in December," according to Andrew Kenningham, chief Europe economist at Capital Economics.

"The new restrictions announced in France and Germany, and likely to be replicated elsewhere, will probably tip the eurozone economy into another recession," Kenningham wrote in a research note on Thursday.

France and Germany announced new lockdown measures Wednesday amid a spike in COVID-19 cases.