The European Central Bank said Thursday it will slow the pace of its emergency asset purchases, which were launched last year to support the economy amid the Covid-19 crisis, as policymakers worry higher inflation may last long. The Governing Council left its key interest rate, the main refinancing rate, unchanged at zero, the deposit rate at -0.50 percent and the marginal lending rate at 0.25 percent. The decision was in line with economists' expectations. The bank reiterated its forward guidance on interest rates that policymakers expect the key ECB interest rates to remain at their present or lower levels until inflation is seen reaching two percent well ahead of the end of its projection horizon and durably for the rest of the projection horizon. They should also judge that realized progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilizing at two percent over the medium term, the bank added. "This may also imply a transitory period in which inflation is moderately above target," the ECB said in its statement. Net asset purchases under the pandemic emergency purchase programme, or PEPP, will continue with a total envelope of EUR 1,850 billion until at least the end of March 2022 and, in any case, until policymakers judge that the coronavirus crisis phase is over, the ECB said. "Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council judges that favorable financing conditions can be maintained with a moderately lower pace of net asset purchases under the PEPP than in the previous two quarters," the bank added.
Policymakers are worried that inflation could remain at higher levels for a while before easing off.
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April 24, 2026 15:15 ET Economics news flow was relatively light this week even as the conflict in the Middle East continued, raising concerns for policymakers. In the U.S., spending data, initial jobless claims and pending home sales were the highlights. Business confidence in the biggest euro area economy was in focus in Europe. Inflation data from Japan gained attention in Asia.