Monetary policy measures taken during pandemic revived euro area economy

Abstract

During the COVID-19 pandemic, monetary policy securities purchases and policies to support bank lending have helped us avoid a deeper recession and deflation in the euro area. As a consequence of the securities purchases, GDP has, based on our model calculations, grown around 2 percentage points faster annually and inflation has been around 0.5 of a percentage point faster in 2020 and 2021. In a similar manner, refinancing operations to support bank lending during the pandemic have boosted annual GDP growth by around 0.5 of a percentage point and inflation by around 0.2 of a percentage point. Without the securities purchases, GDP would at the end of 2021 be around 3.5% and consumer prices around 1% lower. By the end of 2021, the refinancing operations will have boosted GDP by around 1% and consumer prices by around 0.3%.