FRANKFURT – The European Central Bank will accelerate its withdrawal from bond purchases as the economic shocks following Russia’s attack on Ukraine continue to push up inflation, it announced on Thursday.
It said in a declare.
As expected, the ECB retained its flexibility in the fog of war, noting that any subsequent asset purchases would depend on economic data.
“If incoming data support expectations that the medium-term inflation outlook will not weaken even after the end of our net asset purchases, the Board of Governors will end APP net buying in the third quarter.” , it said.
The ECB has also adjusted its so-called term guidance on interest rates to indicate that the first rate hike will not necessarily be immediately after the end of asset purchases, as it has previously indicated.
Instead of insisting that the Board of Governors expects net buying to end “just before” the start of a hike in the benchmark interest rate, the ECB said on Thursday that a change “will take place some time later.” when”end of property purchase”and will slowly.”
The euro rose 0.7 cents to 1.11 against the dollar in the announcement.
At its February meeting, the ECB pre-announced faster asset purchases after January’s inflation data spiked, defying expectations of a slump. Since then, February inflation has increased further to 5.8%, while sharp increases in food and energy prices will make matters even worse in the coming months.
ECB President Christine Lagarde will explain that decision by the Board of Governors at a press conference starting at 14:30 CET. She will also share ECB staff forecasts for growth and inflation, which will provide the first official look at the central bank’s official assessment of how the war will impact the economy. economy of the euro area.
More generally, the ECB said that “Russia’s invasion of Ukraine is a turning point for Europe” and stressed that it “will take whatever action is necessary to fulfill the ECB’s mandate.” is to pursue price stability and protect financial stability.”
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