ECB Sends a Dovish Tone as it Warns Covid-19 Pandemic Woes are Yet to Clear

ECB Sends a Dovish Tone as it Warns Covid-19 Pandemic Woes are Yet to Clear

(ECB) The European Central Bank has recognized the growing uncertainty from Covid-19 strains, voting to keep rates at present or lower levels until the 2% inflation target is reached.

The ECB sees a solid recovery momentum at the global level but says the pandemic uncertainty could cause uneven growth in different countries. 

The Governing Council says economic activity could hit pre-crisis levels in the first quarter of 2022, but there is a long way to go to offset the impacts caused by Covid-19.

The central bank says significant policy support is needed to enhance uniform recovery, with inflation projected to rise in the medium term but remain below the 2% target.

ECB warns that growth could underperform expectations if the Covid-19 situation worsens and supply shortages continue to hold back production.

The central bank recognized that money creation continued to normalize in the euro area in May, hitting 8.4% in annual growth terms as monetary and credit flows moderated.

The ECB Governing Council said it will maintain or adjust the asset purchase program, reinvestment policies, and long-term refinancing operations to support price stability.

DAX is up +0.16%, EURUSD is down -0.01%.

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