In order to ramp up emergency stimulus, the new Omicron covid variant must have a significant damaging impact on the euro area economy, European Central Bank (ECB) Governing Council member Martins Kazaks said in a Bloomberg interview on Wednesday.

Key quotes

“At the current moment, we don’t know how the omicron variant will develop.”

“Unless it spills over into significant and large negative revisions to the outlook for growth, I don’t see that March — which the market has been expecting for some time and which we’ve been communicating in the past — should be changed.”

“If in February we see that it’s painful then, of course, we can change our views and that’s the issue of flexibility.”

“In my view, it’s possible both to restart PEPP or increase the envelope if it turns out to be necessary.”

“To exactly what level will it land in 2023-24, of course, there’s lots of uncertainty.”

“With little evidence that soaring prices are triggering wage increases that would risk entrenching faster inflation, “my baseline remains that it slides to below 2%.”

Market reaction

EUR/USD shrugs off these comments, as it continues to trade in a familiar range below 1.1300. The spot is up 0.16% on the day.