ECB's Panetta says new bond purchase programme shows strong commitment to help EU

FILE PHOTO: Senior Deputy Governor of the Bank of Italy, Fabio Panetta is seen in his office ahead of his appointment to the European Central Bank's executive committee, in Rome, Italy September 26, 2019. REUTERS/Remo Casilli/File Photo

ROME (Reuters) - The new emergency bond purchase programme (PEPP) announced by the European Central Bank shows its strong commitment to ensure support to both Italy’s and Europe’s economies, ECB board member Fabio Panetta said on Thursday.

The ECB launched a 750-billion-euro bond buying programme after an emergency meeting late on Wednesday in a bid to stop a pandemic-induced financial rout from shredding the euro zone’s economy and raising fresh concerns about the bloc’s viability.

“There’s no limit to what we can do to keep the European economy on the path of growth,” Panetta told state broadcaster Rai, echoing similar remarks made by ECB President Christine Lagarde.

The dedicated scheme brings the ECB’s planned purchases for this year to 1.1 trillion euro with the newly-agreed buys alone worth 6% of the euro area’s GDP.

“Italian and European citizens can expect what they have a right to: a strong, decisive and coordinated intervention,” Panetta said, adding that the coronavirus outbreak would cut Italy’s and Europe’s growth by a few percentage points.

Italy, the worst-hit country by coronavirus after China, saw its 10-year debt yields rise by more than 60 basis points before the ECB announcement, while the closely-watched spread over Germany ballooned to almost 320 basis points.

Reporting by Giuseppe Fonte; Editing by Giulia Segreti and Alex Richardson