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ECB Begins ‘Gradual’ Tapering Its Stimulus

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Central Bank To Leave Some Interest Rates Unchanged While Raising Others By 0.25

ECB Begins ‘Gradual’ Tapering Its Stimulus, Global Economic Report
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With worsening supply-chain disruptions and inflation in Europe rising to 8.1 percent, the European Central Bank is planning to taper its massive monetary stimulus policies.

On July 1, the ECB plans to raise its set of interest rates by 25 basis points. ECB President Christine Lagarde signaled the bank would do so again in September if needed. The bank will also stop net asset purchases. The bank said its approach is one of “gradualism.”

“I think in times of great uncertainty, gradualism is probably appropriate, more so than if the path is clear, well-identified and we all understand where we are heading,” Lagarde said.

In line with that, the bank is leaving some of its interest rates unchanged. These include rates on the main refinancing operations, the marginal lending facility, and the deposit facility. Respectively, they’ll stay at 0.00%, 0.25% and -0.50% respectively.

The Good And The Bad Economic News

In its policy statement, the ECB blamed Russia’s actions for the economic troubles.

“Russia’s unjustified aggression towards Ukraine continues to weigh on the economy in Europe and beyond. It is disrupting trade, is leading to shortages of materials, and is contributing to high energy and commodity prices.”

The ECB projects economic growth will decline from 2.8 percent in 2022 to 2.1 percent by 2024. Positive economic news included: more reopening of the economy, a strong jobs market, and private savings accumulated during the pandemic.

ECB Begins ‘Gradual’ Tapering Its Stimulus, Global Economic ReportCopyright secured by Digiprove © 2022 Patti Mohr
monetary stimulus, ECB Begins ‘Gradual’ Tapering Its Stimulus, Global Economic Report

Patti Mohr

Patti Mohr is a U.S.-based journalist. She writes about global diplomacy, economics, and infringements on individual freedom. Patti is the founder of the Global Economic Report. Her goal is to elevate journalistic principles and share the pursuit of truth in concert with others.

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