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Presenting gloomy outlook, Lagarde calls for unlocking EU aid

FRANKFURT, Nov 19 (Reuters) - European Central Bank President Christine Lagarde called on EU leaders on Thursday to end a potentially damaging budget impasse and repeated a promise to keep monetary policy super easy to help a recession-hit euro zone recovery from the pandemic shock.

“The Next Generation EU package must become operational without delay,” Lagarde told the European Parliament’s committee on economic and monetary affairs.

“The euro area economy is expected to be severely affected by the fallout from the rapid increase in infections and the reinstatement of containment measures, posing a clear downside risk to the near-term economic outlook.

The European Union’s 750 billion Recovery Fund hit its biggest obstacle yet this week when Hungary and Poland blocked the measure, raising the risk that even if a compromise is reached eventually, funds would be delayed.

With the bloc heading back into recession this quarter, the Lagarde also repeated a promise to ease policy at its December 10 meeting, with measures focused on more emergency government bond buys and cheap loans to the bank sector. (Reporting by Balazs Koranyi Editing by Francesco Canepa)