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European Central Bank to Reduce Pandemic-Era Bond Buying

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European Central Bank to Reduce Pandemic-Era Bond Buying

Christine Lagarde, president of the European Central Bank, said the bank would “moderately” reduce the pace of the pandemic-era bond-buying program that it has used to ease the impact of the coronavirus on the eurozone economy.

The euro-area economy is clearly rebounding. However, the speed of the recovery continues to depend on the course of the pandemic and progress with vaccinations. The current rise in inflation is expected to be largely temporary, and underlying price pressures will build up only gradually. Based on a joint assessment of financing conditions and the inflation outlook, the governing council judges that favorable financing conditions can be maintained with a moderately lower pace of net asset purchases under the pandemic emergency purchase program than in the previous two quarters. The rebound phase in the recovery of the Euro-area economy is increasingly advanced. Output is expected to exceed its pre-pandemic level by the end of this year. With more than 70 percent of European adults fully vaccinated, the economy has largely reopened, allowing consumers to spend more and companies to increase production. While raising immunity to the coronavirus means that the impact of the pandemic is now less severe, the global spread of the Delta variant could yet delay the full reopening of the economy. We stand ready to adjust all of our instruments as appropriate to ensure that inflation stabilizes at our 2 percent target over the medium term.

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