The central bank is also sticking to the billion-dollar bond purchases, the ECB announced on Thursday in Frankfurt.
The central bank has recently repeatedly confirmed its assessment that inflation rates will gradually fall in 2022 – even if this could take longer than initially expected. ECB President Christine Lagarde said just two weeks ago that there are no signs of a dangerous wage-price spiral that could drive up inflation in the long term.
At least at the moment there are no signs that inflation could get out of control, Lagarde said at the time: “On the contrary: we assume that energy prices will stabilize over the course of 2022 (…) and then they will Inflation rates are gradually declining.”
January inflation in Austria rose to 5.1%
However, inflation is still staying at a comparatively high level. Contrary to expectations, inflation in the euro zone rose even further in January to 5.1 percent. This is the highest value since the introduction of the euro as the common European clearing currency in 1999.
In Austria, the annual rate of inflation at the beginning of the year also rose to 5.1 percent according to the flash estimate by Statistics Austria from yesterday, Wednesday. In December, inflation was still 4.3 percent. Above all, rising energy prices are fueling the upward pressure on prices. In Germany there was a decline to 4.9 percent in January. But that was less than expected.
Comparatively high inflation is worrying consumers. Because higher inflation weakens their purchasing power because they can buy less for one euro than before. Critics accuse the ECB of fueling inflation with its ultra-loose monetary policy, including bond purchases worth billions for years.
At the meeting in mid-December, the Governing Council of the ECB sent the first signal that the flood of money was coming to an end: the ECB will only purchase additional securities as part of its PEPP bond purchase program launched during the corona pandemic until the end of March. However, the central bank is still investing several billions in government bonds and corporate securities: the general purchase program APP is being temporarily increased. Funds from expiring PEPP papers are to be reinvested by at least the end of 2024.
criteria “not met”
Lagarde had repeatedly rejected an imminent interest rate hike in the euro area. “We will have new projections in a few months. These could look different, and at that point we will have to look at our roadmap,” Lagarde said recently with a view to the central bank’s new inflation and economic forecasts expected for March. Referring to the central bank’s inflation target, Lagarde emphasized: “We will act as soon as the criteria are met, but they are not met at the moment.”
The central bank is aiming for a stable price level with an annual inflation rate of 2 percent for the currency area of the 19 countries. It accepts it if this mark is temporarily exceeded or undercut.
Source: Nachrichten
