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ECB's Schnabel Says Strong Fiscal Response Needed To Ease Covid-19 Impact

European Central Bank Executive Board member Isabel Schnabel sought a strong fiscal response at the European level to deal with the economic crisis caused by the spread of the coronavirus, or Covid-19, and said the central bank is ready to do everything in its power to ease the impact.

"Monetary policy cannot solve this crisis on its own," Schnabel said in an interview to the German weekly Die Zeit, the text of which was published on the ECB website on Wednesday.

"Most economists agree that fiscal policy is currently the most important tool for dealing with the crisis," she said.

The monetary policy aims to avoid a fragmentation in the euro area, the policymaker said.

Schnabel also said that the existing growth forecast for the euro area, which is 0.8 percent for this year, will definitely be downgraded significantly.

"We are experiencing a very severe economic shock," she said.

"The likelihood of recession has therefore increased noticeably," the policymaker added.

Regarding ECB's communication, Schnabel said the ECB is ready to do everything in its mandate to address market turmoil that will disrupt monetary policy transmission. "The entire Governing Council agrees on this," she added.

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