ECB Should Reduce Crisis Stimulus, Focus on Inflation: Holzmann

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The European Central Bank should discuss at its upcoming meeting how it will transition from emergency stimulus provided during the coronavirus crisis to monetary support that will help it meet its inflation goal, Governing Council member Robert Holzmann says in interview.

• “We are now in a situation where we can think about how to reduce the pandemic special programs. I think that’s an assessment we share”
  • “At our September meeting, we have the opportunity to discuss how do we close the pandemic part and focus on the inflation part.”
• Slowdown of PEPP purchase pace in fourth quarter “definitely” a discussion to take place next week
• ECB should “disentangle” guidance on asset purchases from path of future interest rates
• APP doesn’t need same kind of flexibility of PEPP
  • “It was there during the pandemic but I don’t think it has a role to address inflation issues”
• “The supply problem is something that occupies us all. But it’s something that will fade. This reduces some of the production but it doesn’t derail it”

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