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ECB leaves key interest rate at zero percent

2022-03-10T12:58:05.004Z


High inflation and economic dangers from the Ukraine war: In this situation, the ECB has left its key interest rate at a historically low level - but is reducing its bond purchases more quickly.


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European Central Bank in Frankfurt am Main

Photo: Michael Probst/AP

The European Central Bank (ECB) is reducing its bond purchases faster than previously planned.

After a temporary increase, the purchase volume of the APP program will be reduced again to EUR 20 billion at the end of June.

With this decision on Thursday, the Governing Council of the ECB reacted to the persistently high inflation rates.

However, the key interest rate in the euro zone remains at a record low of zero percent.

This decision was not easy for the ECB.

She had to balance stability with continued high bond purchases and low interest rates in view of the recent escalation of the war in Ukraine - and on the other hand raising interest rates against the high energy prices and inflation rates in Europe.

To this end, the pressure on the ECB has recently increased.

In February, it once again decided to continue its loose monetary policy course, but indicated that it might change its monetary policy course in the future.

ECB Executive Board member Isabel Schnabel had shown - even before the Russian invasion of Ukraine - how difficult it is for Europe's monetary authorities to find the right balance: There is both the risk of acting too early and the risk that the ECB will concede act late: »We have to find the right balance between these two risks.«

At the beginning of March, Bundesbank President Joachim Nagel, who has been in office since the beginning of the year, once again referred to persistently high inflation: "We must keep an eye on the normalization of our monetary policy."

So far, the ECB Governing Council had only decided on the bond purchases that the central bank would only buy additional securities until the end of March 2022 as part of its PEPP bond purchase program launched during the corona pandemic.

However, according to previous planning, billions should continue to flow through the general purchase program APP.

More soon on SPIEGEL.de

apr/dpa

Source: spiegel

All business articles on 2022-03-10

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