The European Central Bank indicated on Thursday that it will reduce asset purchases more quickly than expected as it examines the economic consequences of Russia’s invasion of Ukraine.
In a statement, the ECB stated that if economic data permits, it will cease its bond-buying program in the third quarter. The central bank also stated that if the outlook changes, it will reconsider its decision.
The unexpected move comes amid rising fears that the eurozone economy would soon suffer from stagflation, a toxic combination of slow growth and excessive inflation. Consumer prices in the 19 euro-area nations have risen to new highs for four months in a row, with the most recent increase of 5.8% in February.
“If the incoming data support the expectation that the medium-term inflation outlook will not weaken even after the end of our net asset purchases, the Governing Council will conclude net purchases under the APP in the third quarter,” the bank said, referring to its asset purchase program.
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