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EZU Speeds Up Winding Down of Monetary Stimulus

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Monetary Stimulus

The European Central Bank surprised with a faster winding down of monetary stimulus, as it noted that inflation is likely to stabilize at its target over the medium term.

Source: European Central Bank

IEV is down 1.50%, while EZU is down 2.09%.

ECB officials decided that monthly net purchases under the asset purchase program will amount to €40 billion in April, €30 billion in May, and €20 billion in June. They also indicated a possible stop as soon as the third quarter.

President Christine Lagarde said the Governing Council expects inflation to moderate to the 2% target over the medium term but noted that the ongoing tensions between Russia and Ukraine are a “substantial” upside risk to energy prices.

The decision comes contrary to the expectations of economists who anticipated a delay in major policy decisions, giving more firm for officials to better gauge the situation. Several members earlier renewed their commitment to stop large asset purchases.

Lagarde spoke with a barge showing the colors of the Ukrainian flag on her jacket while speaking to the media.

 

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