The first area is the surveillance on domestic fiscal policies with a view to preventing excessive deficits and unsustainable public debt. The second one is the adoption of a mutual surveillance framework on macroeconomic policies in the euro area focussing on those countries which experience sustained losses of competitiveness and large current account deficits as these countries face the greatest sustainability challenges.
This preliminary analysis indicated that cutting rates all the way to the effective lower bound was the best contribution the Bank could make to stabilizing the economy and complementing the government’s efforts. Looking ahead, the outlook is highly conditional on how long the containment measures remain in place, and how households and firms adapt.