The European Central Bank leaves interest rates firm as expected: the policy rate remains at zero, the deposit rate at -0.50% and the marginal lending rate at 0.25%. This was announced by the ECB after the monetary policy meeting. The ECB confirms the scenario outlined in December on bond purchases: the pandemic program (Pepp) will end in March and will continue at a less sustained pace until then, but intends to reinvest the capital which will mature “at least until 2024″. In addition – reads a note from the ECB – “the future reduction of the Pepp portfolio will be managed in such a way as to avoid any interference with the appropriate orientation of monetary policy” and “in conditions of stress, flexibility will remain a policy element. monetary”. Politics” .
“The surge in inflation in the euro zone – said ECB President Christine Lagarde at the press conference after the Governing Council – surprised on the upside”, and is due “mainly to the rise in prices energy, as well as food”. Inflation will likely stay higher for longer than expected, but will decline over the course of the year. The risks on the inflation forecast “are on the upside” and the surge in prices is starting to affect consumption and investment “thus risking weakening economic growth”. I never commit without setting conditions. We will be evaluating very carefully, based on the available data “with the new March forecast, and” we will be progressive in any decision we make. Lagarde said in response to a question about whether the ECB still views a rate hike in 2022 as “highly unlikely.” Markets are already integrated. Lagarde added that within the Governing Council “there is unanimous concern” about the evolution of inflation and “its impact on our European compatriots”.
Equity markets without particular shocks after the ECB’s decision on interest rates and the confirmation of the securities purchase programme, as President Christine Lagarde’s press conference begins. Amsterdam remains the heaviest stock market in the session with a 0.9% decline, with Frankfurt down more than half a percentage point. Milan with the Ftse Mib index fell 0.4%, while Paris and London fell 0.2%. In very slight against-trend Madrid, which progressed by 0.1%. Some tensions on European government bonds, with a spread between BTP and Bund still around 140, while the yield on the Treasury product rose to 1.46%.