The European Central Bank (ECB) will keep bond buying in the coming weeks, it said on Thursday, saying it had not resisted calls from some politicians to restrain its monetary stimulus as the eurozone economy recovered from the coronavirus epidemic.
The Frankfurt-based institution has kept its main political events unchanged in its latest statement.
It said: “Based on the joint assessment of financing conditions and inflation prospects, the Board of Directors expects net purchases [pandemic emergency purchase programme] In the coming quarter, it continued to be implemented at significantly higher rates than in the first months of the year. “
ECB President Christine Lagarde will explain the decision at a press conference late Thursday and present new quarterly forecasts for the eurozone economy.
Coronavirus infection rates are falling, and blockades are being lifted across Europe. Vaccination rates are accelerating after a slow start. In recent weeks, business activity, consumer confidence and inflation have all fallen sharply.
Given the bright outlook for the economy, which is expected to be reflected in the ECB’s slightly higher inflation forecasts, some more conservative hawks on its board have called for a slowdown in the bond-buying process.
But a month ago, a number of board members went on sale in the debt market pushed back against this idea, calming investors’ nerves and taking back borrowing costs for eurozone governments.
By doubling the size of its epidemic procurement program last year, the ECB has $ 1.1 billion totaling $ 1.85 billion. From the euro, which was to be spent under its leading crisis management policy, which was to be paid at least until March 2022.
Most analysts believe that the ECB will continue to reject any talk of easing bond purchases to save growth. Eurozone inflation only 2% of its target temporary effect while supply adjusts to demand return.
“The central banks are pleased to be on the curve at the moment,” said Henrietta Pakvement, Wells Fargo Asset Management’s European loan portfolio manager. “Production in Europe is going well, services are expected to improve, but I think the ECB will want to see more evidence of recovery before it does.”