She told a meeting of the G30, which refers to a group of financiers, central bankers and academics, that the restrictions “will add to uncertainty” for firms and households.
“It is clear that both fiscal support and monetary policy support have to remain in place for as long as necessary and ‘cliff effects’ must be avoided,” Lagarde said, according to Reuters.
Lagarde recently said that there would be a boost for the EU economy if the pandemic kept going the way it has been. She said that could entail a “major economic stimulus package,” according to PYMNTS, with resources including interest rates, forward guidance and asset purchase programs.
That may end up being what needs to be done, as a “second wave” talked about for months seems to be coming to pass. Case numbers are rising in Europe, and in France, a public health state of emergency was recently declared. Meanwhile, Germany and the U.K. have added new layers of protections to combat rising infection and hospitalization rates.
In addition, Lagarde said rising debt levels could be a problem, although she said the the region’s banks likely have the resources needed to deal with issues that arise.
Earlier this month, economists said Europe’s recovery from the pandemic could be slowing down, with residents thinking they’d initially beaten it being proven wrong, European Central Bank Chief Economist Philip R. Lane said, according to PYMNTS.
Lane said a renewed level of restrictions “is posing renewed challenges,” particularly for businesses which depend on people coming out of their homes to do business. For service companies, momentum has been strangled since August and business services have contracted since September.