The European Central Bank (ECB) will not react to inflation data and change its own policy in accordance with them, said the head of the regulator Christine Lagarde, quoted by CNBC.
Thus, the ECB leadership refused to notice the data on the record for the last year price growth in the euro area. According to the January data, inflation in annual terms was 0.9 percent. Adjusted for seasonality and excluding energy and certain types of food, inflation was 1.4 percent, up from 0.2 percent in December.
Indicators are approaching the ECB’s target level of two percent per annum, but still far from reaching it. In view of this, according to Lagarde, the regulator should not change monetary policy and raise the rate in order to slow down the growth of prices and avoid overheating of the economy.
On the contrary, in the near future the ECB will accelerate the pace of bond purchases under the quantitative easing (QE) program. This will lead to an increase in their prices and a decrease in yields, which will become a benchmark for rates on other debt obligations denominated in euros. The total volume of the program, calculated until March 2022, will amount to 1.85 trillion euros.
According to Lagarde, the ECB will not allow statistics such as inflation or yields to “go one step ahead of economic development” and get in the way.