The dangers posed by the coronavirus to Europe's expected economic recovery are still lurking, European Central Bank President Christine Lagarde said to the European Parliament on Monday.

She listed a renewed increase in new infections, virus mutations and strict containment measures imposed in response as some of the factors posing a "significant downside risk for economic activities," according to Deutsche press agency (dpa).

The start of vaccine campaigns was a "light at the end of the tunnel," but there was still uncertainty about how the pandemic will unfold, and production remains below pre-pandemic levels, she said.

Recovery is expected to begin when lockdown restrictions are lifted. The economy will then be supported by favorable financing conditions, supportive fiscal policies and recovery in demand.

Lagarde added that inflation remained low despite an increase in January due to weak demand and a slump in the job market and product market. Inflation is expected to rise in coming months, she said, but weak demand and the euro's appreciation will dampen price pressure.

Against this backdrop, said the head of the EU central bank, providing support through loose monetary policy is still necessary.

SOURCE: BAHRAIN NEWS AGENCY