ECB Announced a Faster End to its Asset Purchases Program
ECB Decision
The European Central bank announced today a faster tapering path of its Asset Purchases Program (APP) and an earlier conclusion than previously communicated.
In particular, the central bank announced that monthly net purchases under the APP will amount to €40 billion in April, €30 billion in May and €20 billion in June and the Governing Council will conclude the APP in the third quarter, if this is supported from the incoming data. [1]
This surprised many market participants, as it constituted a hawkish shift from February's plan for monthly net purchases that would amount to €40 billion in the second quarter of 2022 and €30 billion in the third quarter. [2]
However, Ms Lagarde downplayed this change during her press conference, stressing that today's decision was not an acceleration of the normalization process and unequivocally stating that "We are not in any way accelerating". [3]
Any increase in the interest rates will take place "some time after the end" of the asset purchases and will be "gradual". We believe that this opens the door to a rate hike within this year, a scenario that Ms Lagarde had been rejecting until recently, but last month refused to rule out [4].
The central bank also released the updated staff macroeconomic projections which upgraded Inflation and downgraded economic growth for 2022. Inflation is now set to average 5.1% this year and GDP 3.7%, from 3.2% and 4.2% respectively, in the December projections. [5]
EUR/USD reacted higher on the news around the APP but erased gains and at the time of writing, trades in negative territory.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
References
| Retrieved 10 Mar 2022 https://www.ecb.europa.eu/press/pr/date/2022/html/ecb.mp220310~2d19f8ba60.en.html | |
| Retrieved 10 Mar 2022 https://www.ecb.europa.eu/press/pr/date/2022/html/ecb.mp220203~90fbe94662.en.html | |
| Retrieved 10 Mar 2022 https://www.youtube.com/watch | |
| Retrieved 10 Mar 2022 https://www.ecb.europa.eu/press/pressconf/2022/html/ecb.is220203~ca7001dec0.en.html | |
| Retrieved 29 Mar 2026 https://www.ecb.europa.eu/pub/projections/html/ecb.projections202203_ecbstaff~44f998dfd7.en.html |
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