ECB Issues New Guidance, Sees Bond Buying Continuing at Elevated Rate By Investing.com

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© Reuters.

By Geoffrey Smith 

Investing.com — The European Central Bank said it expects to continue buying bonds at an elevated pace over the next two months, re-asserting its determination to steer against expectations of an early tightening of monetary policy due to a spike in inflation in the first half of this year.

The ECB also said it won’t raise interest rates until its new goal of a 2% inflation rate is well within reach, and until its Governing Council thinks that underlying price pressures are strong enough to keep it around 2% in the medium term. 

The change in the ECB’s guidance comes a week after the bank adopted a new inflation target of 2%, something that allows it a slightly higher tolerance threshold for above target inflation. The ECB said that its new approach “may also imply a transitory period in which inflation is moderately above target.”

 

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