ECB’s Governing Council have decided on a “moderately lower pace” of PEPP purchases based on an improved inflation outlook amid favorable financing conditions. Quite importantly, the decision was taken unanimously.
Outlook improved and pre-pandemic inflation path now in sight: The key reason behind the ECB’s turn is the improved economic outlook. The pandemic lost some of its sting as large parts of the lockdown measures were unwound and in its updated staff projections the growth path was lifted upwards. The current spike in inflation is still viewed as temporary but the inflation path is lifted as well.
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