The European Central Bank has reaffirmed its determination to keep borrowing costs low in the euro area, saying it will maintain its recently accelerated pace of bond purchases until the economy of the Union is firmly on the road to recovery.
The central bank kept its main policy measures unchanged on Thursday. In a statement released after the decision, policymakers said that “the information received confirmed the joint assessment of financing conditions and inflation outlook made at the March monetary policy meeting.”
Therefore, “the board of directors expects purchases within the framework of the [pandemic emergency purchase programme] during the current quarter, continue to be carried out at a much higher pace than during the first months of the year, ”the statement said.
The deposit rate remained at minus 0.5% and the ECB reiterated its position that its € 1.85 billion emergency bond purchase program may be further expanded or not fully utilized , depending on its progress in stimulating the recovery of production and inflation.
The euro area economy continues to suffer from the containment measures deployed to curb the high rates of Covid-19 infection in the bloc. But the pace of vaccinations has recently picked up in many countries, fueling hopes of economists that restrictions could be relaxed next month, a move many expect to trigger a strong rebound.
The most conservative members of the ECB Governing Council hope the economic outlook will brighten enough in the coming weeks to justify a reduction in the pace of bond purchases when new forecasts are released in June, although other board members consider this premature given the low level of bond purchases. inflation.
One of the major issues facing policymakers is the debate over when to start ending the massive bond buying programs launched by central banks around the world in response to the economic shock of the pandemic.
The Bank of Canada said wednesday it would reduce its monthly bond purchases in response to the improving economic outlook. But the US Federal Reserve said last month he was not yet ready to reduce his asset purchases and the Bank of England said recently he planned to complete his bond purchases “by the end” of this year.
At the ECB’s last monetary policy meeting in March, he decided to make emergency bond purchases at a ‘significantly higher pace’ in the second quarter to mitigate the risk of a liquidation in bond markets driving up borrowing costs before the recovery takes hold .
But since then, its weekly net purchases have only increased marginally, leaving analysts wondering if the recent rebound in sovereign bond markets led ECB officials to change their minds.