Status: 09.09.2021 2:35 p.m.
The European Central Bank will reduce its monthly bond purchases from the fourth quarter in view of the good economic situation. However, she is sticking to the duration and scope of the purchase program. The key interest rate will also remain unchanged.
The European Central Bank (ECB) is slowing down a little when it comes to emergency aid. In the fourth quarter of 2021, the acquisition of government and corporate securities as part of the Corona emergency purchase program PEPP is expected to be “moderately” lower than currently. That was decided by the Governing Council at its meeting today.
Most recently, the ECB invested around 80 billion euros a month in securities through the Pandemic Emergency Purchase Program (PEPP) launched during the pandemic. The total volume of the program remains at 1.85 trillion euros. The term until at least the end of March 2022 will not change either.
Economy better than expected
The PEPP program is intended to support the flow of credit to the economy during the Covid crisis. Furthermore, favorable financing conditions for companies, states and households are to be ensured.
The economy is developing better than expected in the current year, said ECB Vice President Luis de Guindos in an interview published in early September: “If inflation and the economy recover, there will logically be a gradual normalization of monetary and fiscal policy . “
The key rate remains unchanged
On the other hand, there is no end in sight to the low interest rates in the euro area. The ECB is still keeping the key interest rate in the euro area at a record low of zero percent. Commercial banks still have to pay 0.5 percent interest when they park money at the central bank.
Inflation remains an issue
Critics accuse the ECB of using all the cheap money to fuel inflation, which it actually wants to keep in check. The central bank’s primary goal is stable prices. In the meantime, however, the ECB has given itself more flexibility in dealing with higher inflation rates: The central bank has recently been aiming for an annual inflation rate of two percent for the currency area and is at least temporarily ready to accept a moderate increase or decrease in this mark.