A Galeria Kaufhof warehouse is closed as many smaller stores are allowed to open in Essen, Germany, Monday, April 20, 2020.
A Galeria Kaufhof warehouse is closed as many smaller stores are allowed to open in Essen, Germany, Monday, April 20, 2020.

Europe Central Bank President Christine Lagarde said Thursday the COVID-19 epidemic is driving an “unprecedented” economic slump in Europe and pledged the bank’s full support during the crisis.

In a video discussion with reporters from the bank’s headquarters in Frankfurt, Lagarde said the bank projects the euro area Gross Domestic Product (GDP) — the key measure of the value of all goods and services produced in a region — could drop between 5% and 12% this year, depending on how long coronavirus containment measures remain in place.

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Like the U.S. Federal Reserve, Lagarde said the ECB will use stimulus measures to keep credit flowing and prop up the economy. This includes what she called “the best tool in our toolbox” — a $820 billion pandemic emergency bond purchasing program (PEPP) set to bring the ECB's total asset purchases to around $1.2 trillion this year.

Lagarde said the bank was "fully prepared" to increase the emergency plan if necessary, adding that it could run beyond 2020.  

The ECB is also maintaining low interest rates and using incentives to encourage banks to continue loaning money to businesses and consumers during the COVID-19 crisis.

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