The central bank intends to reduce its bond purchases in the coming months as planned.
(Photo: dpa)
Frankfurt As expected, the European Central Bank (ECB) is leaving interest rates at the previous level. She is also sticking to her plan to reduce her bond purchases. From the third quarter, it would then no longer be able to buy any further securities net. The central bank announced this after its council meeting on Thursday in Frankfurt.
It left the deposit rate at the previous level of minus 0.5 percent and the key interest rate at zero percent. The APP bond purchase program is expected to be EUR 40 billion a month from April and then drop to EUR 30 billion a month in May and EUR 20 billion in June.
According to the central bank’s statement, the data received since the last Governing Council meeting in March “reinforced the expectation that the net purchases of bonds should be completed in the third quarter”.
The ECB is currently under pressure because of the high inflation in the euro area. In March, this had risen to 7.5 percent. This is the highest level since monetary union began. The central bank is aiming for a value of two percent in the medium term. The war in Ukraine and the associated sanctions are currently fueling inflation even further, but are also causing a high level of uncertainty and are thus slowing down the economy.
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The high inflation actually speaks for a rapid tightening of monetary policy. However, this could further weaken the economy, which is already burdened by the Ukraine war.
The Fed has already raised interest rates
Some economists are already warning of stagflation, i.e. a combination of high inflation and economic stagnation. Unlike the ECB, other central banks have already raised interest rates significantly.
The US Federal Reserve raised the key interest rate in the US to 0.25 to 0.5 percent in March and signaled further steps in this direction. Experts believe it is possible that the Fed will raise interest rates by half a percentage point at each of its next two meetings in May and June.
More: Danger of stagflation: Investors protect their portfolio with these four strategies