Extended data
At the second meeting, the European Central Bank kept interest rates unchanged, while inflation fell sharply. However, it said it would speed up the withdrawal from the epidemic stimulus plan of 65,438+0.7 trillion euros (65,438+0.8 trillion US dollars). As predicted by all 59 economists in the survey, the deposit interest rate remained at a record 4%. The European Central Bank reiterated that this level will make a "significant contribution" to the goal of returning consumer price growth to 2%.
At the same time, ECB officials said that they would speed up the end of reinvestment under the bond purchase plan. This will put all policy tools into austerity mode, although the latest forecast shows that the weak European economy will weaken the inflation outlook. European Central Bank President Lagarde told reporters in Frankfurt: "The risks facing economic growth still tend to be downward." However, she said that the risks faced by the price are more balanced. She warned: "If the effect of monetary policy is stronger than expected, the growth may be lower."
The exchange rate of the euro against the US dollar remained stable, while German government bonds slightly retreated their previous gains. The difference between Italian and German 10-year bond yields fell below 170 basis points, and some investors expected PEPP to take more radical actions. Traders withdrew their bets on the ECB's interest rate cut next year, and now the ECB is expected to cut interest rates by 65,438+055 basis points, compared with about 65,438+060 basis points earlier in the trading day.
"The future decision of the Management Committee will ensure that its policy interest rate is kept at a strict enough level when necessary. The European Central Bank said in a statement. However, it abandoned the wording that inflation "is expected to remain too high for too long" and said that inflation will "gradually decline next year".
Keeping borrowing costs unchanged reflects the decisions of the Federal Reserve and the Bank of England in the past day. However, although Federal Reserve Chairman Powell said that discussions on interest rate cuts have begun, which has intensified the global bet on interest rate cuts, it is expected that European Central Bank President Lagarde will join the ranks of the Bank of England and oppose this expectation. The market expects the European Central Bank to cut interest rates as early as March, but Lagarde said that there should be no action in "the next few quarters".