The management of the European Central Bank already knows the date by which it will stop buying bonds, thus ending several years of quantitative easing. That is, pumping money into the economy to boost economic growth and raise inflation to the 2% target.
The European Central Bank will stop supplying liquidity to the financial market during this summer. The ECB leadership agreed on the timing at Thursday’s meeting. It is also meant to be the first step towards raising interest rates in response to the relentless pace of price level rises in the eurozone. The risks of inflation thus outweighed the risks arising from the impact of the Russian invasion of Ukraine, which has been ongoing for more than two weeks. Meanwhile, the ECB was concerned about a possible repeat of the economic recession that occurred the year before due to the coronavirus pandemic.
According to ECB President Christine Lagarde, the war in Ukraine is an event that will slow economic growth in the eurozone but lift inflation. “The Russia-Ukraine war will have an impact on economic activity and inflation through rising energy and commodity prices, disruptions to international trade and weakening confidence,” Lagarde told a press conference after a meeting of central bankers.