ECB Decision April 2021

The President of the European Central Bank, Christine Lagarde, is addressing MEPs during a plenary session of the European Parliament in Brussels on 8 February 2021.

Olivier Matthys | AFP | Getty Images

LONDON – The European Central Bank decided on Thursday to keep its policy unchanged, while market players look for clues as to when its massive monetary stimulus could begin to be liquidated.

“The Governing Council has decided to reconfirm its very accommodative monetary policy stance,” the ECB said in a statement on Thursday.

The President of the European Central Bank, Christine Lagarde, will answer questions after the most recent meeting, at 14:30 local time.

The central bank said last month that it would increase government bond purchases – although it falls within the planned € 1.85 trillion ($ 2.2 trillion) package by March 2022 – to address rising bond yields. euro area. At the time, the ECB expressed concern about the sharp rise in borrowing costs for eurozone governments before the economy fully recovers from the coronavirus shock.

As a result, data from Deutsche Bank showed that the ECB bought € 74 billion in bonds in March, up from € 53 billion and € 60 billion in February and January.

“The Governing Council expects PEPP acquisitions in the current quarter to continue at a significantly faster pace than in the first months of the year,” the ECB said on Thursday, suggesting it will continue to buy more bonds in the first quarter. the following months compared to the first few months of the year.

Eyes on June

Market players are looking forward to the June meeting, the next on the ECB’s calendar, as the next key moment for monetary stimulus in the euro area.

Hawkish ECB members hope that as vaccination rates rise and economies slowly reopen, they will be able to start talks on when to ease the stimulus. However, this will depend on how the pandemic and the respective vaccination programs are conducted. Many European nations have been forced to return to strict coronavirus blockade after a third wave of infections over Easter.

The ECB said on Thursday that everything would depend on changes in funding conditions.

“The package can be recalibrated if necessary to maintain favorable financing conditions to help counteract the negative pandemic shock to inflation,” the ECB said in a statement.

The ECB’s political mandate is to keep inflation close, but below 2%. Current forecasts estimate that inflation will reach a maximum of 2% in the last quarter of 2021, but will decrease throughout 2022.

The market reaction was deactivated after the announcement, as it met analysts’ expectations not to take any further action.

In March, the ECB forecast a GDP (gross domestic product) rate of 4% for 2021 and 4.1% for 2022.