ECB's Christine Lagarde sees upside risk to growth from consumption bounce

FRANKFURT: The pandemic still weighs on the euro zone economy but growth could still rebound quicker than now expected as consumers begin spending again, European Central Bank President Christine Lagarde told European lawmakers on Monday.

"While on the downside, the spread of virus mutations continues to be a source of risk, on the upside, brighter prospects for global demand and a faster-than-anticipated increase in consumer spending could result in an even stronger recovery," Lagarde told a European Parliament committee.

Lagarde added that it was not yet time to allow interest rates to rise, so the ECB would maintain favourable financing conditions.

"A sustained rise in market rates could translate into a tightening of wider financing conditions that are relevant for the entire economy," she said, repeating her June 10 policy statement. "Such a tightening would be premature and would pose a risk to the ongoing economic recovery and the outlook for inflation."