The European Central Bank (ECB) will conduct a thorough assessment of the economic outlook following the Russian attack on Ukraine at its Governing Council meeting on March 10, according to an ECB spokesman.
“This (assessment) will include the latest geopolitical developments,” her spokesman said.
According to a Reuters report, the Russian invasion of Ukraine has changed the image of the ECB’s plans to end its regular bond buying program (APP), which would pave the way for its first interest rate hike in more than a decade. .
An informal meeting of the ECB’s Governing Council is scheduled for today in Paris, coinciding with Russia’s invasion of Ukraine, which threatens to derail economic growth in the Eurozone and complicate the ECB’s exit from a period of negative interest rates.
Today’s meeting was to prepare the decisions for the central bank meeting on March 10 for a possible termination of the bond buying program.
The Russian invasion of Ukraine, however, has changed the picture as it boosts the prospect of higher energy costs, financial turmoil and declining eurozone trade. This development could lead to a slowdown in economic growth and inflation in the Eurozone, which relies on Russian gas for 40% of its needs.
THE Governor of the Bank of Greece, Giannis Stournaraswas the first to mention the consequences of the Ukrainian crisis, stating in an interview with Reuters that the ECB should continue buying bonds at least until the end of the year to mitigate its impact.
The exact economic impact is difficult to quantify before the full extent of the conflict and the ensuing financial sanctions are known, but analysts agree that the ECB is likely to slow the withdrawal of support measures for the economy.
“It will make the ECB more cautious and may delay the decision to phase out bond markets,” said a Pictet analyst.
THE head of research at Daiwa Capital Markets agreed that the Ukrainian crisis “will slow down the pace of ECB policy normalization”, while ING economist He added that the ECB may not set a date for the termination of the APP.
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