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Key takeaways from policy statement
“This major step frontloads transition from prevailing highly accommodative level of policy rates towards levels that will ensure timely return of inflation to ECB’s 2% medium-term target.”
“Based on current assessment, over next several meetings, ECB expects to raise interest rates further to dampen demand and guard against the risk of a persistent upward shift in inflation expectations.”
“Will regularly re-evaluate its policy path in light of incoming information and evolving inflation outlook.”
“Future policy rate decisions will continue to be data-dependent and follow a meeting-by-meeting approach.”
“Soaring energy and food prices, demand pressures in some sectors owing to the reopening of the economy, and supply bottlenecks are still driving up inflation.”
“Price pressures have continued to strengthen and broaden across the economy and inflation may rise further in the near term.”
“As current drivers of inflation fade over time and normalisation of monetary policy works its way through to economy and price-setting, inflation will come down.”
“ECB staff have significantly revised up their inflation projections and inflation is now expected to average 8.1% in 2022, 5.5% in 2023 and 2.3% in 2024.”
“After a rebound in first half of 2022, recent data point to a substantial slowdown in euro area economic growth, with economy expected to stagnate later in year and in first quarter of 2023.”
“Very high energy prices are reducing purchasing power of people’s incomes and, although supply bottlenecks are easing, they are still constraining economic activity.”
“In addition, adverse geopolitical situation, especially Russia’s unjustified aggression towards Ukraine, is weighing on confidence of businesses and consumers.”
“This outlook is reflected in latest staff projections for economic growth, which have been revised down markedly for remainder of current year and throughout 2023.”
“Staff now expect economy to grow by 3.1% in 2022, 0.9% in 2023 and 1.9% in 2024.”
“Lasting vulnerabilities caused by pandemic still pose a risk to smooth transmission of monetary policy.”
“ECB will therefore continue applying flexibility in reinvesting redemptions coming due in pandemic emergency purchase programme portfolio, with a view to countering risks to transmission mechanism related to pandemic.”
