Ekonomické zprávy
15.12.2021

What to expect from the December ECB meeting? - economists

With consumer inflation rising strongly and concerns about a new strain of coronavirus, ECB policymakers will have to make a difficult choice at their last meeting this year.

According to official data, the eurozone consumer price index rose by 4.9% per annum in November, updating the record high. Meanwhile, there is evidence that the omicron strain will become the dominant strain of the coronavirus, which may cause new blockages to contain the virus.

In general, the increase in the incidence of coronavirus and high inflation have complicated the picture to such an extent that the ECB may need more time to make decisions.

In order to support the eurozone economy, the ECB has developed a new bond purchase program (PEPP) in March 2020. PEPP is due to end in March 2022. Along with the use of PEPP, the ECB also applied its asset purchase program (APP), with a volume of 20 billion euros per month.

Experts believe that the ECB will still announce the end of the PEPP program by March. But the main focus at the December meeting will be on new forecasts for inflation and growth. 

Another key question is how the ECB will turn the end of the PEPP program at the end of March into a more flexible and potentially larger APP, without provoking serious market volatility and maintaining favorable financial conditions. The ECB is expected to stress the need for flexibility.

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