November 29, 2021

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Inflation continues to rise but ECB leaves interest rates low |  Financial issues

Inflation continues to rise but ECB leaves interest rates low | Financial issues

Reporter Dorinde Meuzelaar closely follows the interpretation of the interest rate decision. Read the Twitter Live Report at the bottom of this article.

The European Central Bank announced this Thursday afternoon after its interest rate meeting. The interest rate remained at -0.5%. The bonds the European Central Bank is buying are part of a 1,850 billion euro package designed to protect the eurozone economy from the impact of the coronavirus.

no surprise

Not surprisingly, the European Central Bank continues to buy bonds. The central bank says high inflation is a temporary problem and that prices will not rise further over the next year.

The next meeting promises to be even more exciting. Then the central bank is expected to say something about how to phase out Corona subsidies next year.

pigeons and hawks

Meanwhile, pressure is mounting on ECB President Lagarde. On Thursday it emerged that inflation in Germany rose to 4.5% in October, the highest level in 28 years. This is well above the ECB’s 2% target.

Tensions are also rising within the European Central Bank’s governing council. On the other hand, there are “hawks” who want the ECB to end bond buying quickly. The “pigeons”, mostly administrators from southern countries, want the central bank to continue stimulating the economy for a while.

Last week, Jens Weidmann, president of the Bundesbank and one of the ECB executives, announced his departure. He is considered the main critic of loose monetary policy. In his farewell speech, he wrote that the ECB must fight not only low inflation, but high inflation as well.

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European Central Bank President Christine Lagarde will explain the decision at 2:30.