Over to you

10 Mar 2022 By Swaha Pattanaik Follow @swahapattanaik

President Christine Lagarde is winding down asset purchases. It’s the opposite of what the central bank did in past crises, but high inflation is forcing her hand. Shielding the euro zone economy from the Ukraine war’s consequences will fall to politicians, who are slower to act.

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The European Central Bank said on March 10 that it might wind up asset purchases in the third quarter of 2022 as it predicted that high inflation was likely to be more persistent due to soaring prices for energy and commodities.

A pandemic-era purchase programme will be discontinued at the end of March 2022. Net monthly purchases made under a different scheme, called the APP or asset purchase programme, will amount to 40 billion euros in April, 30 billion euros in May and 20 billion euros in June, the central bank said.

“If the incoming data support the expectation that the medium-term inflation outlook will not weaken even after the end of its net asset purchases, the Governing Council will conclude net purchases under the APP in the third quarter,” the central bank said in a statement.

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