ECB says it will keep to faster pace of bond buying to help the economy bounce back from COVID

European Central Bank President Christine Lagarde has said she expects sharp rises in inflation to be temporary.
Olivier Matthys/Pool via Reuters

The ECB said it would keep snapping up bonds at the current rate and left interest rates on hold.
The central bank increased the pace of its purchases in March in response to rising bond yields.
Europe’s economy is bouncing back as coronavirus vaccinations pick up and restrictions are eased.
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The European Central Bank kept interest rates at record lows on Thursday and said it would keep purchasing bonds at a quicker pace to hold down borrowing costs across the economy.
"At today’s meeting, the Governing Council decided to reconfirm its very accommodative monetary policy stance," the ECB’s policymakers said.
The euro slipped after the decision and was down 0.11% against the dollar at $1.217.
The central bank for the eurozone kept its main deposit rate unchanged at -0.5% and held its bond-buying package steady at 1.85 trillion euros ($2.3 trillion).
It also said it expects to keep buying bonds at a significantly higher pace than during the first months of the year.
The ECB increased the pace of its purchases in March in response to rising bond yields, which it said could have pushed up borrowing costs in the single-currency bloc.
Like other central banks around the world, the ECB has been keeping a close eye on inflation. As with the Fed, the central bank thinks sharp price rises should be temporary as the economy adjusts to life after the coronavirus pandemic.
ECB boss Christine Lagarde said in May that she expected inflation to return to lower levels next year.
The central bank is set to release a new set of economic predictions, expected to reflect a recovery in the eurozone economy in recent months as COVID-19 vaccinations have picked up and restrictions have been gradually eased in many countries.
Read the original article on Business Insider

Source: https://www.businessinsider.com/ecb-european-central-bank-interest-rates-bond-buying-inflation-june-2021-6

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