Despite the improvement of the Eurozone economy, the European Central Bank still insists on its bond purchase plan
The European Central Bank said on Thursday that it will maintain the pace of bond purchases in the next few weeks and resist calls from some policy makers that as the euro zone economy recovers from the effects of the coronavirus pandemic, it will begin to control its monetary stimulus measures.
The Frankfurt-based institution kept its main policy measures unchanged in its latest statement.
It said: “Based on a joint assessment of financing conditions and inflation prospects, the management committee expects [pandemic emergency purchase programme] The next quarter will continue at a rate significantly higher than the first few months of this year. “
The President of the European Central Bank, Christine Lagarde, will explain the decision at a press conference later on Thursday and announce the latest quarterly forecast for the euro zone economy.
The level of coronavirus infections is declining, and lockdowns are being lifted across Europe. The pace of vaccination is accelerating after the slow start. In recent weeks, business activity, consumer confidence and inflation have all rebounded strongly.
Given the positive economic outlook, this is expected to be reflected in the slightly raised growth and inflation forecasts of the European Central Bank, and some conservative hawks in its management committee have called for a slowdown in bond purchases.
But after this triggered a sell-off in the bond market a month ago, a series of board members Postpone Oppose this idea, soothe investors’ nervousness and reduce the borrowing cost of the euro zone government.
After the European Central Bank expanded the pandemic emergency purchase program twice last year, out of the total expenditure of its flagship crisis response policy of 1.85 billion euros, only 700 billion euros remain, and the policy will continue until at least 2022. month.
Most analysts believe that the European Central Bank will continue to ignore any proposals it is talking about reducing bond purchases and downplaying the euro zone’s gains. Eurozone inflation Only 2% above the target in May Temporary impact And the supply adjusts to adapt to the rebound in demand.
Henrietta Pacquement, European Credit Portfolio Manager at Wells Fargo Asset Management, said: “The central bank is very happy to be behind the curve at this moment. The European Central Bank hopes to see more evidence of recovery before taking action. “