EU’s Economic Guardians Are Split on Post-Pandemic Strategy

The European Union’s top economic policy makers are exposing a gulf in their views on how to run the economy after the pandemic, Bloomberg News reported. European Central Bank Executive Board member Fabio Panetta said on Monday that monetary officials should retain the “unconventional flexibility” they granted themselves during the crisis, keeping borrowing costs low until government spending helps push up inflation. Hours later, his policy-making colleagues Jens Weidmann and Robert Holzmann said the ECB’s emergency powers are temporary and must end once the emergency is over. Panetta also said the ECB should consider retaining the flexibility ingrained in its 1.85 trillion-euro ($2.2 trillion) pandemic emergency bond-buying program when it expires. An older quantitative-easing program is tied to limits on how much of a country’s bonds can be bought. PMIs show the euro-area economy is rebounding The contrasting monetary viewpoints are echoed in fiscal debates. EU economic comissioner Paolo Gentiloni said on Monday that the bloc’s debt rules “must be realistic, otherwise they are not applicable.” The EU’s executive arm will launch a revision this fall of the Stability and Growth Pact, which set limits for member countries’ public finances, he told Italy’s la Repubblica newspaper. Read more.