The ECB maintains its strategy despite prices but notifies that inflation will last more than expected

Meeting without surprises. The European Central Bank (ECB) holds the pressure of prices unchanged in interest rates or any of the monetary policy instruments

The ECB maintains its strategy despite prices but notifies that inflation will last more than expected

Meeting without surprises. The European Central Bank (ECB) holds the pressure of prices unchanged in interest rates or any of the monetary policy instruments that maintains in force considering that the financing conditions can be maintained with the current formulations, as reported The entity after its monthly meeting celebrated this Thursday in Frankfurt.

No one really expected any change in this regard, despite which the appointment was surrounded by expectations taking into account the crossroads facing the ECB: the weakening of European recovery in a context of increasing inflation. And this has been the central theme of the talks, as the President has recognized the Entity, Christine Lagarde: "Inflation, inflation, inflation," she has responded by being asked about the content of the meeting.

The sustained price increase is the main concern of the Central Bank and although it is still considering that it is transitory and conjunctural, Lagarde has also recognized that it will be extended more than expected. "The current phase of inflation will last more than expected," the president has ensured.

According to Lagarde, the increase in energy prices and demand recovery in full supplies crisis are prolonging pressure on prices and, in the medium term, are two of risk factors for rhythm that economic recovery came Marking so far.

For the rest, the entity's statement already advanced stability as regards the ECB Route Leaf in the last quarter of the year. This was a transition meeting between the month of September, when some changes already advanced, and December, in which an update of macroeconomic forecasts and more details about the "recalibration" of the stimulus package before the pandemic is expected.

With these premises, the Governing Council of the Monetary Authority has underlined that it continues to consider that such conditions can be maintained with a pace of net purchases of assets under its pandemic emergency program (PEPP, for its acronym in English) Lower "at the rhythm recorded in the second and third quarters of the year, something that already announced at the previous meeting.

Regarding the types, they are kept in 0% for refinancing operations, while the ease of deposit rate will continue at -0.50% and the loan ease at 0.25%. In addition, the entity has reiterated that it will leave them at these levels, or lower, until inflation reaches 2% "long before" from the end of the horizon of projections and "durable" for the rest of the temporary window.

Conditions to raise types also include that the progress of underlying inflation is the "sufficiently advanced" to be "consistent" with which inflation stabilizes at 2% in the medium term. "This could involve a transient period in which inflation is moderately above the target," the organism explained in a statement.

As for the PEPP, the ECB also leaves unchanged the total amount of the program at 1.85 billion euros, to spend until March 2022 although without the need to extinguish its volume completely. The ECB will reverse the maturities under this program until the end of 2023.

Likewise, it will continue to carry out net purchases of assets under its standard program (APP) at a monthly rhythm of 20,000 million net "for as long as necessary". The ECB will reinvert the debt funds that vents under this program for a "prolonged" period of time after it begins to raise interest rates.

Lastly, the monetary authority has indicated that it will continue to provide "wide liquidity" through its refinancing operations, especially through the third program of long-term refinancing operations with a specific objective (TLTRO-III).

Updated Date: 28 October 2021, 09:57

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