of Russian President Vladimir Putin invasion of Ukraine has added an extra layer of complexity to decisions facing The decision makers of the European Central Bank (ECB) during their meeting on Thusday.
already manages record inflation figures and a fragility recovery impact of the coronavirus pandemic, members of the bankthe 25-member board of directors must now count with impact of war on the edge of the euro zone.
the pace of consumer price gets up staggered up a gear in February, rising at 5.8% against 5.1% the previous month, a new record absolute for the euro area.
the spike was driven in no small partly due to soaring prices for energy, taken in the middle of the dispute with Russia, a major supplier to Europe countries.
ECB President Christine Lagarde responded to February 24 invasion saying the central bank “would take all necessary measures” to stabilize the euro region that is economy.
Prices for gas and oil were “probably in the court term to increase inflation,” she said, supporting him for longer than the bank previously planned.
Step by step
Soaring inflation has put the ECB under pressure to follow peers in the United States and Great Britain by moving end its economic stimulus and raise interest rates soon.
At his last early meeting of February, the ECB left son project for a “step-by-step” reduction in son asset-purchase programs intact.
Pandemic emergency bond buying program which was the ECB main crisis-fighting tool, aimed at keeping borrowing costs low to fuel the economy growth will end in March.
Under the current A separate pre-pandemic bond-buying program is expected to be increased to 40 billion euros ($44 billion) per month in the close term and wear on at least until October.
Any policy tweaks were pushed back at this week’s meeting, when the board will use of new economic forecasts to support their decision manufacturing.
In December, when the figures were last updatedla bank predicted inflation at 1.8% in 2023, below his both-percent target.
the new inflation projections, which will take into account of the conflict in Ukraine and the most recent data, could experience a strong upward revision.
The outlook, however, was bleak in “a significant uncertainty”, according to the executive of the ECB board said member Isabel Schnabel after the Russian tanks moved on Ukraine.
At the same time, the top cost for the energy had to weigh on the economy and slow production, reducing the flexibility of decision-makers for maneuver.
the double risk will encourage the ECB to “be cautious”, says Andrew Kenningham of Capital economy.
It will be also encourage the bank for give a signal he “might even step up support if necessary”, he added.
Standardization?
In Russia, where the economy is reeling from Western sanctions, central bankers backed up the ruble per more than to double the main interest rate at 20%.
Such high levels are completely foreign to the ECB which has long kept rates at historic lows, including a negative deposit rate which actually charges the banks to park their cash overnight.
Corn more “hawk” members of board of directors who would like like see the ECB act faster increased more vocal.
Inflation fears meant policymakers had to keep their “views formed on standardization of our currency policy“, said the head of the Bundesbank and member of the board of directors, Joachim Nagel.
Observers will listen carefully to Lagarde’s words news conference at 2:30 p.m. local time (1:30 p.m. GMT) to see if the former french finances minister make no advance on his promise for that the ECB is “data driven”.
Lagarde’s previous insistence that any hike in 2022 was ‘highly unlikely’ vanished after February meeting as markets bet on a previous increase.
In light of the tense situation in Europe, “the ECB will want for avoid reference to end dates” for son purchase of bonds” or start Appointment for rate hikes,” said Carsten Brzeski, head of macro to the bank ENG.
Instead, Lagarde could follow its predecessors to “never pre-commit”Brzeski said.
of Russian President Vladimir Putin invasion of Ukraine has added an extra layer of complexity to decisions facing The decision makers of the European Central Bank (ECB) during their meeting on Thusday.
already manages record inflation figures and a fragility recovery impact of the coronavirus pandemic, members of the bankthe 25-member board of directors must now count with impact of war on the edge of the euro zone.
the pace of consumer price gets up staggered up a gear in February, rising at 5.8% against 5.1% the previous month, a new record absolute for the euro area.
the spike was driven in no small partly due to soaring prices for energy, taken in the middle of the dispute with Russia, a major supplier to Europe countries.
ECB President Christine Lagarde responded to February 24 invasion saying the central bank “would take all necessary measures” to stabilize the euro region that is economy.
Prices for gas and oil were “probably in the court term to increase inflation,” she said, supporting him for longer than the bank previously planned.
Step by step
Soaring inflation has put the ECB under pressure to follow peers in the United States and Great Britain by moving end its economic stimulus and raise interest rates soon.
At his last early meeting of February, the ECB left son project for a “step-by-step” reduction in son asset-purchase programs intact.
Pandemic emergency bond buying program which was the ECB main crisis-fighting tool, aimed at keeping borrowing costs low to fuel the economy growth will end in March.
Under the current A separate pre-pandemic bond-buying program is expected to be increased to 40 billion euros ($44 billion) per month in the close term and wear on at least until October.
Any policy tweaks were pushed back at this week’s meeting, when the board will use of new economic forecasts to support their decision manufacturing.
In December, when the figures were last updatedla bank predicted inflation at 1.8% in 2023, below his both-percent target.
the new inflation projections, which will take into account of the conflict in Ukraine and the most recent data, could experience a strong upward revision.
The outlook, however, was bleak in “a significant uncertainty”, according to the executive of the ECB board said member Isabel Schnabel after the Russian tanks moved on Ukraine.
At the same time, the top cost for the energy had to weigh on the economy and slow production, reducing the flexibility of decision-makers for maneuver.
the double risk will encourage the ECB to “be cautious”, says Andrew Kenningham of Capital economy.
It will be also encourage the bank for give a signal he “might even step up support if necessary”, he added.
Standardization?
In Russia, where the economy is reeling from Western sanctions, central bankers backed up the ruble per more than to double the main interest rate at 20%.
Such high levels are completely foreign to the ECB which has long kept rates at historic lows, including a negative deposit rate which actually charges the banks to park their cash overnight.
Corn more “hawk” members of board of directors who would like like see the ECB act faster increased more vocal.
Inflation fears meant policymakers had to keep their “views formed on standardization of our currency policy“, said the head of the Bundesbank and member of the board of directors, Joachim Nagel.
Observers will listen carefully to Lagarde’s words news conference at 2:30 p.m. local time (1:30 p.m. GMT) to see if the former french finances minister make no advance on his promise for that the ECB is “data driven”.
Lagarde’s previous insistence that any hike in 2022 was ‘highly unlikely’ vanished after February meeting as markets bet on a previous increase.
In light of the tense situation in Europe, “the ECB will want for avoid reference to end dates” for son purchase of bonds” or start Appointment for rate hikes,” said Carsten Brzeski, head of macro to the bank ENG.
Instead, Lagarde could follow its predecessors to “never pre-commit”Brzeski said.