European Central Financial institution assembly June 2021: financial projections

The President of the European Central Bank (ECB), Christine Lagarde, speaks at a press conference on the results of the ECB Council meeting on March 12, 2020 in Frankfurt am Main.

Kai Pfaffenbach | Reuters

The European Central Bank decided on Thursday to keep rates unchanged as market participants look for clues as to whether the central bank will soon lift its massive pandemic-era incentives.

“The Governing Council expects the key ECB interest rates to remain at their current or lower levels until the inflation outlook is robustly close to but below 2% within its projection horizon and is reflected in the underlying inflation dynamics,” said the bank issued a statement following its monetary policy decision.

Recent data has shown that inflation for the 19-member currency area that shares the euro is above the ECB’s target of just under but below 2%. The ECB had previously announced that it would expect rates to rise in 2021, but only temporarily.

Market participants therefore want answers on how long the central bank will maintain its massive monetary policy stimulus. It has pledged to purchase EUR 1.85 trillion ($ 2.2 trillion) in bonds by March 2022 as part of its Pandemic Emergency Purchase Program (PEPP).

The euro held at $ 1.21 against the US dollar after the decision was announced on Thursday. ECB President Christine Lagarde will speak at 1:30 p.m. UK time.

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