The European Central Bank decided on Thursday to maintain their policy stance while market players sought more clues about the closure of the monetary stimulus package.
The central bank said last month it would increase purchases of government bonds - although it is still in a planned 1.85 trillion euro ($ 2.2 trillion) plan until March 2022 to offset rising bond yields in the European zone. As a result, data from Deutsche Bank showed the ECB bought 74 billion euros worth of bonds in March, up from 53 billion and 60 billion euros in February and January.
On Thursday, the ECB said that the Governing Council expects purchases under PEPP in this quarter to continue to be made at a much higher rate than in previous months.
Hawkish -toned ECB members argue that as vaccination rates rise and the economy reopens, the ECB will begin discussions on the right time to reduce the outbreak. However it depends on the development of vaccinations and pandemics.
At the same time, the ECB also signaled that it also depends on the development of financing conditions. The ECB’s policy mandate is to ensure inflation stays close but below 2%. Current forecasts estimate that inflation will peak 2% in the last quarter of 2021, but will decline throughout 2022.
The ECB forecasts in March the GDP (gross domestic product) rate for 2021 of 4%, and 4.1% for 2022.
