information about the most likely outlook for our policy. once you stop net asset purchases the signaling aspect of the app disappears and you therefore have to be much more precise about the future path of the short term rates. we will then have to re - specify our forward guidance on interest rates. most likely, we will calibrate it as appropriate for inflation to remain on the sustained adjustment path to our inflation aim. so, as in the past, we will ensure that monetary policy controls the short end of the yield curve. we will proceed at a gradual pace, or a measured pace as mario draghi said, in a way that is most appropriate for inflation convergence – taking into account continued uncertainty about the size of the output gap and the responsiveness of wages to slack. you said you would have a discussion about revising your guidance in early 2018. should you revise the guidance at the same time as you decide what happens beyond september? indeed, early this year, we have removed the easing bias on our app. looking forward, i wouldn ’ t say there is a date or a deadline. the fact that the two of us are talking about this now is already very telling. however, i would not revise the guidance too early, because that could send wrong signals about the end of our net asset purchases, which in any case are intended to run until the governing council sees a sustained adjustment in the path of inflation. when the first rate hike comes, will you only raise the deposit rate until the interest rate corridor is symmetrical again? i think it is premature to discuss this question. what counts in the markets is the level and the expected path of the very short term rate at which banks borrow from each other. because of sizeable excess liquidity expected to prevail over the coming years, the deposit facility rate is the policy rate that can steer those interbank conditions most effectively. benoit cœure argued that given your oversized balance sheet, you can retreat from asset buys without risking an unwarranted rise in term premia. do you agree with this argument? the float – the share of government bonds held by the private sector – has decreased with our purchases. the marginal intervention you have when the float is smaller has the potential to have some bigger effects on prices. but it is a relatively short term consideration. the main argument, and i think it is widely shared, is indeed that the stock becomes very important. but we need to consider that, as the stock ages

07 / 10 / 2020 the ecb ’ s monetary policy in the pandemic : meeting the challenge speech the ecb ’ s monetary policy in the pandemic : meeting the challenge speech by philip r. lane, member of the executive board of the ecb, at the 62nd nabe annual meeting “ global reset? economics, business, and policy in the pandemic ” 6 october 2020 i will provide a brief assessment of the macroeconomic outlook, discuss the ecb ’ s monetary policy response to the pandemic crisis and explain our current monetary policy challenge. the macroeconomic outlook we expect about half of the cumulative decline in output in the first half of the year to have been reversed during the third quarter. compared with the trough, this initial recovery phase is visible across a wide range of economic indicators. that said, the euro area economy is still operating far below its pre - pandemic level. while this in part can be attributed to ongoing supply - side interruptions, the speed of the recovery is also held back by a lack of buoyancy in demand conditions. [ 3 ] meanwhile, the resurgence in infection rates ( and the associated public health measures ) is posing renewed challenges, especially for those sectors most affected by social distancing. reflecting this, the momentum in the services sector has been slowing down since august, while the services business activity pmi fell back into contractionary territory in september. as a result, given the importance of services to the euro area economy, the euro area composite pmi also declined, even if it remained in expansionary territory at 50. 4. in this environment, many households are uncertain about future employment and wage dynamics, motivating them to save more for precautionary purposes. similarly, firms are uncertain about future demand for their products and are grappling with weakened balance sheets, leading to cancellations and delays in investment plans. chart 1 shows that services sector activity has been disproportionately hit ( also when compared with the global financial crisis ). this asymmetry also implies that countries have been differently affected by the pandemic, depending on the degree of reliance on the services sector, including the tourism, travel and entertainment sectors that are especially affected by social distancing and containment measures. chart 1 sectoral gross value added ( quarter - on - quarter percentage changes, percentage point contributions ) https : / / www. ecb. europa. eu / press / key / date