{"id":125606,"date":"2022-02-24T10:32:50","date_gmt":"2022-02-24T10:32:50","guid":{"rendered":"https:\/\/fin2me.com\/?p=125606"},"modified":"2022-02-24T10:32:50","modified_gmt":"2022-02-24T10:32:50","slug":"ecb-meets-as-invasion-of-ukraine-complicates-path-to-higher-rates","status":"publish","type":"post","link":"https:\/\/fin2me.com\/business\/ecb-meets-as-invasion-of-ukraine-complicates-path-to-higher-rates\/","title":{"rendered":"ECB meets as invasion of Ukraine complicates path to higher rates"},"content":{"rendered":"

FRANKFURT (Reuters) – European Central Bank policymakers are gathering on Thursday for what may have suddenly become a crisis meeting as Russia\u2019s invasion of Ukraine threatens to derail economic growth in the euro zone and complicate the ECB\u2019s path out of negative interest rates.<\/p>

FILE PHOTO: Workers maintain the huge Euro logo in front of the headquarters of the European Central Bank (ECB) in Frankfurt, December 6, 2011. REUTERS\/Ralph Orlowski<\/figcaption>

The ECB\u2019s policymaking Governing Council had been due to gather in Paris at lunchtime on Thursday for an \u201cinformal get-together\u201d.<\/p>\n

This was aimed at preparing a decision on March 10 on the likely end of the ECB\u2019s bond-buying stimulus programme and pave the way for the first rate hike in more than a decade to tackle surprisingly high inflation.<\/p>\n

But Russia\u2019s invasion of Ukraine overnight has changed the picture by raising the prospect of higher energy costs, financial turmoil and lower trade for the euro zone.<\/p>\n

This was likely to lead to an immediate spike in energy prices followed by lower economic growth and inflation for the euro zone, which relies on Russian gas for 40% of its needs.<\/p>\n

ECB policymaker Yannis Stournaras was the first to ring the alarm bell, saying in a Reuters interview published on Thursday that the central bank should continue buying bonds at least until the end of the year to counter deflationary effects in the medium to long term from a Ukraine conflict.<\/p>\n

Analysts concurred.<\/p>\n

\u201cIt will make the ECB more cautious and may delay the decision on tapering bond purchases,\u201d said Frederik Ducrozet, a strategist at Pictet.<\/p>\n

Daiwa Capital Markets\u2019 head of research Chris Scicluna agreed that the Ukraine crisis \u201cwould slow the pace of (ECB policy) normalisation\u201d.<\/p>\n

ING economist Carsten Brzeski added the ECB may now stop short of putting a firm end date on its Asset Purchase Programme on March 10.<\/p>\n

No decision was expected at Thursday meeting, which is scheduled to start with a lunch and end at around 10pm (2100 GMT), before a gathering of European Union finance ministers the following day.<\/p>\n

The ECB had not shared a meeting agenda with policymakers but these were expected to discuss the economic outlook, their next policy moves as well as some operational matters.<\/p>\n

This has now changed, with the Ukraine crisis likely to dominate the discussion.<\/p>\n

\u201cThis is now something completely different,\u201d ING\u2019s Carsten Brzeski. \u201cIt takes away the pressure for the ECB to rush into action.\u201d<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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