Russia-Ukraine conflict complicates ECB's rate hike considerations

0 Comment(s)Print E-mail Xinhua, April 8, 2022
Adjust font size:

The Russia-Ukraine conflict added to the uncertainties amid which the European Central Bank (ECB) chose to adopt a prudent stance in formulating its agenda for rate hikes, according to minutes released by the central bank on Thursday.

Commodity prices have surged and energy prices in the euro area have hit record highs since the eruption of the Russia-Ukraine conflict. "The resulting energy price rise had contributed to a substantial reappraisal by markets of the euro area inflation outlook," the ECB said.

The central bank announced in March that it would terminate its asset purchase program, setting the stage for a rate hike under its forward guidance.

However, the minutes released on Thursday indicate that the central bank is prudent and in no hurry to raise interest rates.

The central bank disclosed that the governing council members agreed at their meeting in March to separate the timing of a rate hike from the end date for net asset purchases.

Previously, the ECB alleged that the net asset purchases would end "shortly before" it started raising key interest rates.

By removing the two key words from its forward guidance, the ECB intended to create "extra space" so that it would assess the situation based on incoming data.

It said that there would be "some time" between the end of the net asset purchase program and a rate hike.

The ECB announced in March that it would conclude the asset purchase program in the third quarter this year if its medium-term inflation outlook will not weaken absent the bond-buying program.

Follow on Twitter and Facebook to join the conversation.
ChinaNews App Download
Print E-mail Bookmark and Share

Go to Forum >>0 Comment(s)

No comments.

Add your comments...

  • User Name Required
  • Your Comment
  • Enter the words you see:   
    Racist, abusive and off-topic comments may be removed by the moderator.
Send your storiesGet more from