The Eurozone is not chasing the United States, at least in terms of monetary policy. If the Fed, to counter the rise in prices, accelerates on tapering and rate hikes, the ECB expects inflation to "remain elevated in the near term, but ease next year," not justifying significant monetary tightening. This was confirmed on Thursday by Christine Lagarde, number one of the European Central Bank, after the last meeting of the Eurotower Governing Council.
THE NEW INFLATION FORECASTS
ECB technicians have corrected their forecasts for inflation in the euro area upwards: from 2,2 to 2,6% over 2021, from 1,7 to 3,2% over 2022 and from 1,5. 1,8 to 2023% over 2024 (same level estimated for 1,4, which enters the forecast horizon for the first time). Excluding food and energy prices, inflation is expected to come in at 1,9% this year and 2022% in 1,7, before declining to 2023% in 1,8 and XNUMX. XNUMX% the following year.
Price growth in the Eurozone “will remain above our target for most of 2022, but is likely to ease over the next year – continued Lagarde – The outlook has been revised upwards, but remains below the level target over the forecast horizon. Monetary accommodation, including net purchases of securities with the app and our forward guidance on rates, remains necessary for inflation to stabilize at our 2% target over the medium term.
SECURITIES PURCHASE PLANS
For this reason, the ECB has announced a series of changes to monetary policy that are less significant than those launched yesterday by the Fed.
First of all, from the beginning of the year the Frankfurt institute will cut the amount of the bonds acquired with the Pepp - the purchase plan launched against the pandemic crisis - which will end as planned at the end of March 2022.
At the same time, however, the Central Bank believes that the uncertainty about the economic outlook makes it necessary to maintain an expansive monetary policy: for this reason, the board has extended the renewal operations of the securities accumulated with the PEPP until the end of 2024.
Furthermore, to balance the closure of the emergency plan, in the second quarter the ECB will double the purchases made with the App program to 40 billion euros a month, which will then continue at a rate of 30 billion a month between July and September, to to 20 billion from October. After that, they will remain stable “until we reach our target” of inflation, Lagarde stressed again.
INTEREST RATES
As far as interest rates are concerned, “an increase during 2022 remains very unlikely – reiterated the number one of the ECB – However, our actions are guided by data and therefore we evaluate them whenever they become available”.
For the time being, however, rates are confirmed at historic lows: zero on main refinancing operations, 0,25% on marginal operations and -0,50% on deposits with the central bank itself.
GDP PERFORMANCE IN THE EUROZONE
Finally, Eurotwer has also revised the forecasts on the GDP trend in the Eurozone: from +5 to +5,1% for 2021, from +4,6 to +4,2% for 2022 and from +2,1 ,2,9 to +2023% for 2024. 1,6 enters the time horizon, the year for which ECB experts expect growth of 2021%. According to Frankfurt estimates, due to supply difficulties, the recovery of pre-Covid economic levels will slip from the end of 2022 to the first quarter of XNUMX.
