The European Central Bank (ECB) has communicated that it will maintain flexibility in reinvesting redemptions due in its pandemic emergency purchase programme (PEPP) portfolio until the end of 2024 to counter pandemic-related risks to the monetary policy transmission mechanism. The ECB also plans to begin reducing the PEPP portfolio in the second half of 2024. ECB President Christine Lagarde highlighted geopolitical tensions in the Middle East and the resurgence of supply bottlenecks as significant risks to the economic outlook, leading to increased shipping costs and potential upward pressures on inflation. The ECB's future decisions will ensure that policy rates are set at sufficiently restrictive levels for as long as necessary to bring inflation back to the 2% target in a timely way. The current interest rate levels are deemed adequate by the ECB to substantially contribute to this goal if maintained for a long enough duration. Lagarde observed that despite high domestic price pressures, some measures are showing signs of easing, and inflation could decrease more rapidly if energy prices continue their recent downward trend. She also noted that longer-term inflation expectations are mostly anchored around 2%, but wages and profit margins could present upside price risks. Additionally, the ECB has noted a continuing decline in underlying inflation.
🔴 ECB'S PRESIDENT LAGARDE: I'M SEEING SLIGHT REDUCTION IN THE NUMBER OF VACANCIES ADVERTISED.
🔴 ECB'S PRESIDENT LAGARDE: CREDIT DYNAMICS HAVE IMPROVED SOMEWHAT BUT REMAIN WEAK.
ECB's Lagarde: Domestic Price Pressures High But Some Measures Started To Ease - Longer Term Inflation Term Expectations Mostly Stand Around 2% - Risks To Growth Are Tilted To The Downside
🔴 ECB'S PRESIDENT LAGARDE: INFLATION COULD FALL MORE QUICKLY IF ENERGY PRICES EVOLVE IN LINE WITH THE RECENT DOWNWARD SHIFT.
🔴 ECB'S PRESIDENT LAGARDE: WAGES AND PROFIT MARGINS WOULD ALSO BE UPSIDE PRICE RISKS.
🔴 ECB'S PRESIDENT LAGARDE: GEOPOLITICAL TENSIONS IN THE MIDDLE EAST ARE AN UPSIDE RISK TO INFLATION.
🔴 ECB'S PRESIDENT LAGARDE: LONGER TERM INFLATION TERM EXPECTATIONS MOSTLY STAND AROUND 2%.
🔴 ECB'S PRESIDENT LAGARDE: DOMESTIC PRICE PRESSURES ARE HIGH BUT SOME MEASURES HAVE STARTED TO EASE.
🔴 ECB'S PRESIDENT LAGARDE: ALMOST ALL UNDERLYING INFLATION MEASURES FELL IN DECEMBER.
🔴 ECB'S PRESIDENT LAGARDE: THE DECEMBER INFLATION REBOUND WAS WEAKER THAN EXPECTED.
ECB Says Determined To Ensure Inflation Returns To 2% In Timely Way - Rate Level Must Be Maintained For Sufficiently Long - To Set Restrictive Policy As Long As Needed
🔴 ECB: WE CONSIDER THAT KEY ECB INTEREST RATES ARE AT LEVELS THAT, MAINTAINED FOR A SUFFICIENTLY LONG DURATION, WILL MAKE A SUBSTANTIAL CONTRIBUTION TO THIS GOAL.
🔴 ECB: ECB INTENDS TO CONTINUE TO REINVEST, IN FULL, PRINCIPAL PAYMENTS FROM MATURING SECURITIES PURCHASED UNDER PEPP DURING FIRST HALF OF 2024.
🔴 ECB: THE ECB WILL CONTINUE APPLYING FLEXIBILITY IN REINVESTING REDEMPTIONS COMING DUE IN PEPP PORTFOLIO, WITH A VIEW TO COUNTERING RISKS TO MONETARY POLICY TRANSMISSION MECHANISM RELATED TO PANDEMIC.
🔴 ECB: ECB’S FUTURE DECISIONS WILL ENSURE THAT ITS POLICY RATES WILL BE SET AT SUFFICIENTLY RESTRICTIVE LEVELS FOR AS LONG AS NECESSARY.
🔴 ECB: BASED ON OUR CURRENT ASSESSMENT, ECB CONSIDERS THAT INTEREST RATES ARE AT LEVELS THAT, MAINTAINED FOR A SUFFICIENTLY LONG DURATION, WILL MAKE A SUBSTANTIAL CONTRIBUTION TO THIS GOAL.
*ECB: PEPP REINVESTMENTS TO RUN UNTIL END 2024 *ECB REITERATES PLAN TO START REDUCING PEPP PORTOFOLIO IN 2H *ECB: DECLINING TREND IN UNDERLYING INFLATION HAS CONTINUED *ECB: RATE LEVEL MUST BE MAINTAINED FOR SUFFICIENTLY LONG TIME
🔴 ECB: ASIDE FROM AN ENERGY-RELATED UPWARD BASE EFFECT ON HEADLINE INFLATION, DECLINING TREND IN UNDERLYING INFLATION HAS CONTINUED, AND PAST INTEREST RATE INCREASES KEEP BEING TRANSMITTED FORCEFULLY INTO FINANCING CONDITIONS.
Shipping costs are soaring because of the Red Sea turmoil. Sound familiar? ECB's Lagarde cites the return of supply bottlenecks as a key risk to the outlook. https://t.co/23Xj8Tzbqe via @economics @endacurran @jrandow @alexlongley1 https://t.co/EvUV6KHzVB