European Central Bank chief Christine Lagarde on Thursday underlined the ECB's commitment to cheap money as the eurozone remains mired in a coronavirus pandemic that has muddied the region's economic outlook.
With the bloc deeply in need of support economically to mitigate the devastation wrought by the health crisis, Lagarde said governors did not discuss the issue of winding down its 1.85 trillion euro ($2.2 trillion) pandemic emergency bond purchasing programme because it was "simply premature".
"There is a long way to go until we've crossed the bridge of the pandemic and the recovery is sustainable and solid," said Lagarde.
A vaccination campaign, currently being ramped up after a stuttering start, would likely underpin "a firm rebound in economy activity in the course of 2021," Lagarde said.
But eurozone economies will still need all the help they can get to return sustainably to the path of growth.
As such, she repeated her plea for eurozone governments to do their part, including by quickly getting a 750-billion-euro EU coronavirus recovery fund operational.
"This would allow the next generation EU programme to contribute to a faster, stronger and more uniform recovery," she said.
The landmark fund will offer loans and outright grants to EU countries hit hardest by the pandemic, such as Italy. It smashes long-held stereotypes of Germany as a "frugal" country staunchly opposed to taking responsibility for others' debt.
The fund was given a boost on Wednesday when a top German court threw out a legal challenge against it, paving the way for its ratification by the EU's biggest economy.
But with only 17 out of 27 countries having ratified, impatience has been rising from countries that sorely need aid.
- Drive up growth -
For its part, the ECB on Thursday kept to its highly expansionary stance -- holding its interest rates at historic lows and maintaining the accelerated pace of its pandemic bond purchases.
Interest rates are staying at historic lows, including a deposit rate of minus 0.5 percent -- meaning banks pay to store excess cash with the ECB.
The ECB's pandemic emergency bond purchasing programme (PEPP), set to run until March 2022, was also kept intact, although the council stressed it stood ready to "adjust all of its instruments, as appropriate", should it become necessary.
The goal of the ECB's measures, which also include super cheap loans for banks, is to keep borrowing costs low to encourage spending and investment in the 19-nation currency club in order to drive up growth and inflation.
Following last month's pledge to accelerate debt purchases in response to rising bond yields, the ECB's weekly PEPP purchases have averaged 17 billion euros, compared to around 12 billion in January and February.
In quarterly projections published in March, the ECB surprised observers by slightly raising its 2021 growth forecast from 3.9 to 4.0 percent, fuelled by optimism about Europe's Covid-19 vaccine rollout and the global economic rebound.
While the speed of inoculations has picked up across the bloc in recent weeks after a bumpy start, many countries are battling the spread of more contagious virus variants, including strains first detected in Britain and South Africa.
Top eurozone economies Germany, France and Spain are among those that have extended or reimposed shutdowns and travel curbs to rein in Covid cases, weighing on second-quarter growth prospects.
Eurozone inflation meanwhile continued its upward trend and climbed to 1.3 percent in March, powered in part by higher energy prices.
Economists see inflation bounding even higher in the months ahead, possibly exceeding the ECB's long-out-of-reach inflation target of "close to, but below" 2.0 percent.
After keeping its programme unchanged this time round, analysts believe the ECB may well signal a slowing down of its PEPP programme at the June meeting, when new economic forecasts are due to be announced and a clearer picture emerges on how the vaccination campaign is helping to bring some normalcy back to life in Europe.
"Our best guess is that an upgrade to staff projections will lead the ECB to 'gradually' reduce the pace of PEPP purchases from Q3 while keeping the flexibility of the programme and the total envelope unchanged," said Frederik Ducrozet of Pictet Wealth Management.
The euro was trading at $1.2028, down from $1.2035 late on Thursday, although it had been up against the dollar ahead of the meeting.