“When will we raise rates? Last time I was asked what the phrase that rates will raise in the euro area ‘at some point’ after the end of the asset purchase program (PPA) meant. So the number one of the ECB Christine Lagarde, in the press conference following the announcement of the rates and monetary policy decisions taken by the ECB.
Lagarde continued: “It could be weeks or months” after the end of the plan. In any case, with regard to any possible decision “we will have recourse to the principles of optionality, gradualism and flexibility”.
The press conference was called in smart working. In fact, Lagarde tested positive for Covid-19 about a week ago.
In today’s meeting, the Governing Council of the European Central Bank has kept the cost of money steady, as expected. Interest rates on main refinancing operations, marginal lending facility and central bank deposits remain unchanged at 0.00%, 0.25% and -0.50% respectively.
The ECB confirmed its intention of a quicker exit from stimuli in light of growing inflationary pressures.
“Inflation has increased significantly and will remain high in the coming months, mainly due to the sharp rise in energy costs. Inflationary pressures have intensified in many sectors,” the ECB explained.
On the quantitative easing front, net monthly purchases under the APP will amount to € 40 billion in April, € 30 billion in May and € 20 billion in June. At today’s meeting, the Governing Council felt that the data received after the last meeting reinforce its expectation that net purchases under the APP should close in the third quarter.
The calibration of net purchases for the third quarter will be data driven and will reflect the evolution of the Governing Council’s assessment of the outlook.