Lagarde: Economy to Operate Normally by End of 2021

The President of the European Central Bank (ECB), Christine Lagarde, said on Thursday that the decision to extend the ECB stimulus program comes as the Eurozone is expected to achieve herd immunity from the Coronavirus, helping the economy operate normally, by the end of 2021, the Guardian reported.

“We have good reasons to believe that by the end of 2021, with uncertainty associated with it, we will have reached sufficient herd immunity to hope that by the end of 2021 the economy will begin to function under more normal circumstances and that in particular the service sector will not be impaired by a lot of these social distancing and restrictions that apply to it at the moment and do not facilitate the growth of the sector.”

“That takes you into the beginning of 2022 where the economy really begins to recovery very seriously, the recovery takes root, and we are essentially two years after the beginning of COVID.”

Lagarde further noted that the ECB expected a second wave of the pandemic, but the depth, duration, and preventive measures are deeper than previously estimated.

The ECB has reduced its expectations for the inflation rate in 2020 to 0.2% from a previously expected 0.3%, while its estimates for next year’s inflation remained unchanged at 1%.

Meanwhile, the ECB now expects inflation in 2022 to reach 1.1%, after previously expecting it to amount to 1.3%.

For the year 2023, an inflation rate of 1.4% is expected.