Economic damage of new corona wave likely to be less dramatic: ECB’s Knot

Economic damage of new corona wave likely to be less dramatic: ECB’s Knot

AMSTERDAM (Reuters) – The new wave of coronavirus infections is slowing economic recovery in Europe but is likely to have less impact than the first phase, Dutch central bank President Klaas Knot said on Tuesday.



a man wearing a suit and tie: ECB board member Knot appears at a Dutch parliamentary hearing in The Hague


© Reuters/EVA PLEVIER
ECB board member Knot appears at a Dutch parliamentary hearing in The Hague

“We have reasons to believe the second wave will have a less dramatic impact than the first, for which we were totally unprepared”, Knot told reporters.

“We know a bit more about the virus now, and businesses have learned to adapt where possible, for instance through online retail.”

But new restrictions to fight the new wave of infections are starting to slow growth, the Dutch member of the European Central Bank’s governing council added.

Gallery: Why the US Economy Isn’t Ready for a Second Wave of Coronavirus (GOBankingRates)

“Early indicators point at slowing growth. It is clear the second wave will dent the recovery, but it is too early to say by how much.”

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Knot said the ECB would monitor the need to extend its own emergency support measures but would need more information on the economic outlook to make a decision.

But as new lockdowns and other measures spread throughout Europe, governments and central banks need to keep up their support for businesses and workers who are at risk of losing their jobs, he stressed.

“The costs of ending measures too soon are higher than the costs of maintaining them longer than necessary. And we must avoid ending them all at once. When the time comes, the exit must be gradual and predictable.”

The Dutch central bank on Tuesday said it would continue to give the largest Dutch banks extra room to keep credit flowing by lowering capital demands until at least the end of next year.

(Reporting by Bart Meijer, editing by Larry King)

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