The ECB thus surprisingly decided to end the extraordinary stimulus measures faster than originally planned. Rising inflation outweighs fears of the effects of the Russian invasion on Ukraine. At the same time, a faster end to asset purchases opens the way for an increase in interest rates at the end of this year.
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Regarding interest rates, the ECB stated that they would not make any adjustments until “some time” after the end of the asset purchases and that the adjustments would be gradual.
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The ECB will buy assets worth EUR 40 billion (CZK 1 trillion) under the APP program in April, EUR 30 billion in May and EUR 20 billion in June. The amount of purchases in the third quarter will depend on other statistics and the inflation outlook.
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So far, the ECB has planned purchases of 40 billion euros in the second quarter, a reduction of 30 billion euros in the third quarter and 20 billion euros in the fourth quarter.
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The decision is a surprise for investors. The Reuters poll expected the ECB to make as few commitments as possible and keep options open until it became clearer about the war in Ukraine, the impact of sanctions and future commodity prices.
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The ECB also confirmed that it plans to end the asset purchase emergency program (PEPP) at the end of the month. It had a total of 1.85 trillion euros (46.9 trillion CZK).
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Inflation in the eurozone rose to a record 5.8 percent in February and is expected to rise further in March. The ECB aims to keep inflation at two percent.
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