FRANKFURT, Germany — Rising eurozone inflation will
provide the backdrop for the meeting of European Central Bank (ECB) governors
Thursday, with markets hoping for hints of when policymakers might start easing
their massive pandemic-era stimulus.
اضافة اعلان
As the economic recovery gathered steam in the 19-nation
club, consumer prices rose at a pace not seen in the past decade, reaching
three percent in August — well above the ECB's new two-percent target.
ECB president Christine Lagarde previously promised to
"look through" the surge and policymakers expect the rate to rise
even further in coming months before falling back.
"We are more worried about the inflation rate being too
low in the medium term rather than too high," Isabel Schnabel, a member of
the ECB's executive board, said last month.
The ECB considers the jump in consumer prices to be driven
by one-off, pandemic-related effects as energy prices recover and policies
aimed at mitigating the economic impact are rolled back.
As such, observers do not expect the ECB's governing council
to adjust historically low interest rates or announce any significant change to
their colossal bond-purchasing program, despite some grumbling among its 25
members.
Jens Weidmann, the president of the German Bundesbank, urged
the ECB in August not to ignore the risk of a higher inflation outlook, and
said the ECB must stand ready to gradually scale back its bond-buying.
Focus on Lagarde
"Even if some ECB hawks reemerged over the last days,
we don't expect their pushback to be strong enough to deliver any changes to
the ECB's monetary policy stance," ING bank economists Carsten Brzeski and
Antoine Bouvet said.
The ECB launched its 1.85-trillion-euro pandemic emergency
bond-buying program (PEPP) last year to help the euro region weather the
coronavirus crisis.
The huge asset purchases, scheduled to run until March 2022,
are aimed at keeping borrowing costs low to keep credit flowing and boost
economic growth.
The ECB will on Thursday also unveil the latest quarterly
growth and
inflation forecasts, but analysts expect few surprises.
The inflation outlook is predicted to stay roughly
unchanged, at 1.5 percent in 2022 and 1.4 percent in 2023 — well below the 2.0
percent target.
Lagarde's news conference on Thursday will be scoured for
any signs of future changes in strategy as the eurozone bounces back from the
coronavirus shock.
Future policy needs to be "almost surgical", she
recently told Time magazine, adding it was "no longer a question of
massive support, it's going to be a question of focused, targeted support in
those sectors that have been badly hurt".
All eyes are on the ECB's next move after the US Federal
Reserve (Fed) began openly discussing scaling back stimulus in the United States,
where the economic recovery is seen as further along.
'Modest' slowdown
In a speech to the annual Jackson Hole symposium in late
August, Fed chair Jerome Powell said "it could be appropriate to start
reducing the pace of asset purchases this year".
But Natixis economist Dirk Schumacher said the ECB would
want to "signal its independence" from its US peers.
Talk of when to end the PEPP purchases or of making any
changes to a pre-pandemic bond-buying scheme known as APP were likely to be
postponed until after the September meeting, he added.
However, several ECB board members have recently signaled
their openness to adjusting the pace of the emergency bond purchases.
"If inflation and the economy recover, then there will
logically be a gradual normalization of monetary policy, and of fiscal policy
too," ECB Vice President Luis de Guindos told a Spanish newspaper.
A solid economic rebound is underway across the eurozone
thanks to mass vaccinations, while concerns that the Delta variant could
scupper the recovery have so far not materialized.
Consequently, the ECB could start by "signaling a
'modest' slowdown" in the pace of the PEPP scheme, from 80 billion euros
per month to 60–70 billion euros, suggests Frederik Ducrozet, a strategist at
Pictet Wealth Management.
The slower pace could be framed as a "recalibration of
stimulus", not a sign that the program is being wound down, said Marco
Valli, an economist at UniCredit.
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