ECB strikes a somewhat dovish tone, despite inflation remaining top priority

After the hawkish surprises of previous meetings, no further acceleration of stimulus withdrawal has been hinted at in April. The ECB fully confirmed both its previous guidance on QE, which is set to end “some point in time” in Q3, and policy sequence, with interest rates to rise possibly, but not necessarily, after QE ends.

Flexibility has been emphasised as a valuable means to preserve the transmission of monetary policy and avoid fragmentation. In June – when the new set of macroeconomic projections will be available – the ECB is likely to announce the exact month when QE will end. The ECB has kept encouraging an active fiscal policy, as this worked during the Covid-19 crisis.

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