The revolution imposed by the new monetary strategy of the European Central Bank (BCE) has opened the institution to the possibility of contemplate rates even lower than the current ones to achieve its inflation target of 2%. However, for the time being the institution will keep both its reference rates and its debt purchase programs unchanged.
The institution has warned in a radically different statement from the one that followed its last conclaves that “interest rates will remain at their current or lower levels until inflation reaches 2% long before the end of its forecasting horizon and persistently for the rest of its forecast horizon. ” A measure that it claims to have adopted “in support of its symmetric inflation target of 2%.”
Along the same lines of discourse, the ECB emphasizes that “the progress made in core inflation is sufficiently advanced to be consistent with the stabilization of inflation at 2% in the medium term.” It also warns markets that this “could also imply a transitional period in which inflation is moderately above target.”
With all these ingredients on the table, the institution chaired by Christine Lagarde kicks forward in the calendar of withdrawal of stimuli, adopting an even more tolerant position with the rising cost of living and throwing a new oxygen balloon on the economic recovery of the Eurozone, threatened by the expansion of the Delta variant, to which the communiqué does not expressly refer in any case.
The measures indicated this Thursday have, according to the institution, the objective of “underlining its commitment to maintain a persistently accommodative monetary policy stance.”
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