The European Central Bank said it would keep its large monetary stimulus unchanged, delaying a decision on whether to phase out easy money in response to surging inflation as global supply-chain bottlenecks and shortages weigh on the region’s recovery from the Covid-19 shock.
While the eurozone economy has grown briskly in recent months as governments dialed back social restrictions, the region’s economic output is only expected to return to its pre-pandemic level in early 2022, up to a year later than the larger U.S. economy.
The ECB said in a statement that it will hold its key interest rate at minus 0.5% and continue buying bonds under a 1.85 trillion euros ($2.146 trillion) asset-purchase program at least through March 2022. The bank said it would continue to buy bonds at a “moderately lower pace” in the last months of this year than in the previous six months, echoing a decision announced at its last policy meeting in September.
Its decision to stand pat suggests that the ECB will lag other major central banks including the Federal Reserve in phasing out its pandemic stimulus policies even as eurozone inflation hits its highest level in more than a decade.
Source: Dow Jones