Following the first European Central Bank (ECB) conference in 2021, the institution announces it will stick to the current key rates and the size of the Pandemic Emergency Purchase Program (PEPP) in the near future as the European economy continues to work on I did. In the wake of the Covid-19 pandemic.
Telegraph explained as a “pretty boring” press conference from Christine Lagarde, ECB president said that banks will stick to 0% interest rates until inflation “converges robustly” to a target of at least 2%. I’ve checked.
However, she warned that upward pressure on inflation would take time to emerge, and that it relies heavily on advances in vaccination programs across Europe in addressing infection rates.
Lagarde emphasized that uncertainty remains very high and the ECB refrains from significant changes while the economic landscape is still very vague.
She confirmed that ECB’s short-term forecasts are supported by the latest data, saying, “Overall, the following data is a pronounced base of significant short-term impacts on the economy and long-term weakness in inflation. We are checking the line ratings.”
The ECB added in the statement. “The governing council is ready to adjust all equipment as needed, and in line with its commitment to symmetry, ensuring that inflation moves towards its purpose in a sustainable way.”
Meanwhile, the ECB’s asset purchase pep project remains at 1.85 trillion euros. The Governance Council commented: “If you can maintain favorable financing terms in the asset purchase flow that doesn’t run out of envelopes during Pep’s online purchase period, you don’t need to use the envelopes entirely.”
Importantly, “We can recalibrate the envelopes if necessary to maintain favorable funding conditions that will help counter the negative pandemic shock to the inflationary pathway,” he added. I did.
Lagarde also said the ECB’s governing council continues to monitor the euro exchange rate, reflecting concerns raised at the bank’s final meeting in December. Policymakers still seem to be worried about the strength of a single currency. The GDP/EU rate is currently sitting at 1:1.13 as of 14:57 GMT.
Reactions from market analysts are beginning to flow, and global macrostrategist Frederic Duclosett puts it simply.
On the bright side, boredom is beautiful.
-FrederikDucrozet (@fwred) January 21, 2021
Others, the chief strategist at Danske Bank, took up the ECB’s interesting choice of language in economic forecasts.
The ECB’s decision focuses on funding terms rather than financial terms. In other words, this is due to the financing rates that are focused on (non-financial businesses and households, government).
– Piet Haynes Christiansen (@pietphc) January 21, 2021
Also commented on the ECB announcement was Chris Beauchamp, chief market analyst at IG.
“The euro weakened against the dollar from its high at the beginning of the month, but the overall direction of the trip remains the same.
“The ECB has previously been keen to downplay concerns about the euro’s strength, but if it reduces US stimulus expectations, it will remove the heat of dollar bounce, and Frankfurt policymakers will once again say about the euro’s rise. You may have to start worrying.”
