Despite the rising price trend, inflation rate, the key rate of the ECB remains low. The emergency bond purchase program set up during the pandemic is due to expire next year.

The seat of the European Central Bank (ECB) is in Frankfurt am Main.

Europ & auml; The central bank leaves the key interest rate at zero percent

The current President of the Bundesbank, Jens Weidmann, warned not to underestimate the risk of high inflation.

European central bank leaves the base rate at zero percent

The bond purchases under the emergency bond purchase program PEPP set up as part of the pandemic are also to be suspended at the end of March 2022, as the ECB in Frankfurt am Main announced.

That's what it's all about

  • Prices in the euro zone are rising, the ECB is still leaving the key interest rate at a low zero percent.

  • The bond purchases under an emergency program set up during the pandemic will be discontinued.

  • However, monetary policy support is still necessary to stabilize inflation.

The European Central Bank (ECB) is leaving the key interest rate at a historically low zero percent despite the high inflation rate in the euro zone. The two other important interest rates will also remain unchanged, as the ECB announced on Thursday. The deposit rate for banks is still minus 0.5 percent. For short-term capital injections and so-called overnight loans, 0.25 percent interest is due as before.

The bond purchases under the emergency bond purchase program PEPP set up as part of the pandemic are also to be suspended at the end of March 2022, as the ECB in Frankfurt on Main announced further. In the first quarter of 2022, these bond purchases should also take place to a lesser extent than in the previous quarter.

Support for stable inflation

The Governing Council assumes that “the progress made in the economic recovery and towards the medium-term inflation target will allow a gradual reduction in the speed of bond purchases in the coming quarters,” the ECB said . Monetary policy support is still necessary to stabilize inflation at two percent.

The Governing Council also emphasized its “flexibility” – bond purchases under the EUR 1.85 trillion PEPP could be resumed at any time. The APP bond purchase program, which was set up before the pandemic, is also to be increased from the current EUR 20 billion to EUR 40 billion a month from the second quarter.

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By Teresa Tapmleton

Teresa Tampleton has been a reporter on the news desk since 2018. Before that she wrote about young adolescence and family dynamics for Styles and was the legal affairs correspondent for the Metro desk. Before joining The Nizh TEkegram, Teresa Tampleton worked as a staff writer at the Village Voice and a freelancer for Newsday, The Wall Street Journal, GQ and Mirabella. To get in touch, contact me through my teresa@ntelegram.com 1-800-268-7341

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