Source: Financial Times
The European Central Bank will push through with the gradual reduction of its bond-buying program in the third quarter, even with inflation outlook risks intensifying. EZU is down 0.33%, while VGK is down 0.31%.
- ECB President Christine Lagarde said upside risks to inflation have “intensified,” but this is seen to weaken if demand softens in the coming months.
- Lagarde said the inflationary upturn “reinforced” the ECB’s view to stop bond buying between July and September.
- Inflation in the eurozone accelerated to a record-high of 7.5% in March, with the ECB expecting a deceleration to below the 2% target within two years.
- The ECB on Thursday also hinted to launch a “new instrument” for targeted bond purchases to address unwarranted sell offs in bonds of countries.
- The central bank noted that the pandemic showed that asset purchases helped to offset the “impaired” transmission of monetary policy.
- The ECB maintained its main policy rate at -0.5%, and reiterated that the evaluation of net purchases for the coming quarter will be data dependent.