The European Central Bank has confirmed its plans to scale back bond market purchases over the coming three months, phasing them out sometime in the third quarter of 2022. The move to scale back so-called quantitative easing is likely to push up borrowing costs for countries and puts the timing of an eventual rate hike in focus.
However, rates will not rise until “some time” after asset purchases end, and will do so gradually, the ECB said.
Overall, despite inflationary pressures, the ECB left its policy unchanged on Thursday. Holding interest rates at their exceptionally low levels as expected .
“The Governing Council has concluded that the data received since its last meeting reinforces its expectation that net asset purchases under the APP should be completed in the third quarter,” the ECB said in a statement.
While inflation is at a record high of 7.5 percent and this is putting pressure on the central bank to take heat out of the economy like the US, UK and others have done by raising interest rates, the ECB has warned that Russia’s invasion of Ukraine is also having an impact on the economy, weighing heavily on business and consumer sentiment, while shortages resulting from trade disruptions rather than excess funds are responsible for new material shortages.
Central bank governors in Germany, the Netherlands, Austria and Belgium have all pushed for raising rates sooner rather than later, but this has met with opposition from ECB chief economist Philip Lane, who insisted in his message that he was the main inflationary pressures as temporary.
https://www.independent.ie/business/ecb-sticks-with-plans-to-gradually-roll-out-of-qe-41553869.html The ECB is sticking to plans to phase out QE