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ECB pushes back ‘strategy review’ over virus

The European Central Bank said Thursday it would push back the end of a review of its monetary policy tools and strategy to “mid-2021”, prioritising instead battling the economic impact of the coronavirus.

“In the current situation, the decision-making bodies and staff of the ECB and the national central banks of the Eurosystem are focusing all their efforts on addressing the challenges posed by the coronavirus pandemic,” the Frankfurt institution said in a statement.

“The conclusion of the strategy review will therefore be postponed from the end of 2020 to mid-2021.”

Launching the review in January was one of new ECB chief Christine Lagarde’s first moves in office.

After a post-financial-crisis decade in which the ECB struggled to reach its just-below-two-percent inflation target, the process had been highly anticipated by central bank watchers as the first such exercise since 2003.

In that time, the central bank has aped other leading monetary institutions worldwide by taking up new tools for ever-heftier interventions in financial markets.

Government and corporate bond purchases under one such programme, “quantitative easing” (QE), had mounted to over 2.6 trillion euros ($2.8 trillion) by the time the virus crisis struck Europe.

The ECB now plans to spend over one trillion euros on asset purchases this year alone, including with a freshly-minted 750-billion-euro “Pandemic Emergency Purchase Programme” designed to cushion the coronavirus’ impact.

Its virus-fighting measures also include hundreds of billions of euros in lending to banks at highly favourable conditions, another extension of a scheme introduced to fight the financial crisis and its aftershocks.

Such programmes ranging well outside the central bank’s traditional focus on controlling inflation via interest rates — and their limited success at bringing the price growth target within reach — made a review of the strategy and possibly even the goal itself necessary, policymakers argued last year.

Citizens of the 19 countries in the eurozone single currency bloc can still submit written “proposals and comments” for inclusion in the review via an online portal, after in-person “listening events” had to be cancelled.

The ECB will also delay its summer central banking conference in Sintra, Portugal to November.