ECB stands pat on stimulus amid rising eurozone inflation

ECB stands pat on stimulus amid rising eurozone inflation

FRANKFURT: European Central Bank policymakers shrugged off rising inflation across the eurozone when they met yesterday, with the bank leaving its massive stimulus program unchanged. While supply disruptions have pushed up prices and squeezed industrial production, the ECB kept its accommodative monetary policy stance as it seeks to nurse the economy back to health from the impact of the coronavirus pandemic.

The bank’s 25-member governing council held interest rates at their historic lows, including a negative bank deposit rate that means lenders pay to park excess cash at the central bank. And it decided its massive monthly bond purchases would continue at a “moderately lower” rate than in the second and third quarters in a turbulent period for the eurozone economy.

The 1.85-trillion-euro ($2.15-trillion) pandemic emergency bond-buying programme (PEPP) is the ECB’s main crisis fighting tool, aimed at keeping borrowing costs low to stoke economic growth. Attention will now shift to the press conference of ECB President Christine Lagarde, who faces the difficult task of deciding when to remove stimulus without threatening the recovery or letting inflation run out of control. Analysts expect Lagarde to nod to changing economic circumstances in her statement without prejudging the outcome of the bank’s crucial coming