ECB promises record rates to reach 2% inflation By Reuters




© Reuters. FILE PHOTO: The headquarters of the European Central Bank (ECB) in Frankfurt, Germany, March 12, 2016. REUTERS / Kai Pfaffenbach // File Photo

The European Central Bank on Thursday pledged to keep interest rates at record highs even longer to help sluggish eurozone inflation return to its elusive 2% target.

Eurozone bank stocks rose after the report, government bond yields fell as the euro appreciated briefly before falling flat on the day.

For a text of the ECB statement:

COMMENT:

PIET HAINES CHRISTIANSEN, CHIEF STRATEGY, DANSKE BANK, COPENHAGEN

“This is more in line with the outcome of the new strategy than a new political signal. I note that the wording on bond buying is unchanged.

“The forward guidance is a bit more accommodating and allows for easier policy. The recalibration is about media duration rather than media size.”

XIAN CHAN HEAD OF INVESTMENTS, WEALTH MANAGEMENT, HSBC

“The language used by the ECB is now more forceful, in the sense that it is linking interest rates to its 2% target to show its strength.”

“This is a key development the ECB had to make because the markets before the meeting were not convinced that it could successfully stimulate activity and inflation … it did not disappoint .

“This news is expected to be positive in the near term for European equities and global recovery trading, providing additional support, especially amid growing nerves over the Delta variant. Strong signal that the ECB will hold rates lower for longer is also an indication that the euro could trade lower. ”

ARNE PETIMEZAS, ANALYST AT AFS GROUP, AMSTERDAM

“As always, the ECB is putting off all tough decisions until the last minute. So we’re not going to find out today how they’ll phase out pandemic QE or what happens to the TLTRO teaser rate or ‘just’ QE. . We have to wait even longer for this. “

STEPHANE EKOLO, GLOBAL ACTIONS STRATEGIC AT TRADITION:

“The main takeaway about the ECB’s new guidance is that it sets a timeline for the kind of inflation outlook the central bank is willing to see / tolerate before it begins to tighten policy.”

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