The European Central Bank (ECB) decided at its meeting today to maintain its key interest rate amid concerns about the impact of the crisis in Ukraine.
The ECB signaled an end to bond purchases in the third quarter, earlier than the market expected. This could accelerate interest rate hikes this year to curb inflation, which had risen by 5.8% in February, above the ECB’s 2% target.
The ECB left its refinancing rate unchanged at 0%, a record low, and the ECB deposit rate at -0.50% while leaving the lending rate unchanged at 0.25%.
Meanwhile, the ECB announced it would end its €1.85 trillion Pandemic Purchase Program (PEPP) at the end of the month.
The ECB will also reduce bond purchases under its asset purchase program (APP) to €40 billion in April, €30 billion in May, and €20 billion in June. Further bond purchases will depend on the economic data received by the ECB.