Despite the “increased risks” linked to the war in Ukraine, the European Central Bank is accelerating the exit of its monetary support to the economy.
Between the peril of inflation and that of recession, the European Central Bank (ECB) has chosen to tackle the former. If it has significantly reduced its growth forecast for this year (3.7% instead of 4.2% three months ago), it is the surge in prices that worries it more. After a record 5.8% last month, it should continue in the short term. On average, ECB economists now forecast average inflation of 5.1% over the year, then 2.1% next year and 1.9% in 2024.
Since its mandate is price stability, with a long-term objective of 2%, the Board of Governors, meeting Thursday in Frankfurt, has therefore decided to accelerate the withdrawal of monetary support for the economy, after more than 4800 billion euros invested since 2015. Asset buybacks will therefore decrease, from 40 billion euros monthly in April, to 30 billion in May, then 20 billion in June, before, perhaps, the end of the program of monetary easing…
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