European Central Bank to Institute lower Policies amid Ukraine-Russia Crisis

The European Central Bank (ECB) is set to make few alterations to its monetary policy at their policy meeting on Thursday on account of the warfare between Russia and Ukraine.

Prior to the geopolitical upheaval in Eastern Europe, inflation in the EU soared to marked highs, leading to interest rate hikes after policymaker’s contemplated calling for a halt to the resulting monetary stimulus. However, the ongoing war has changed sentiments leaving the ECB unsettled.

Carsten Brzeski, an economist at ING, contended, "No one can seriously expect the ECB to start normalizing monetary policy at such a moment of high uncertainty." Experts believe that the central bank should instead opt to implement a previous decision of curtailing next quarter’s bond purchases while postponing potential rate hikes that would ensue.

Anatoli Annenkov of the Societe Generale said, "We believe the ECB will aim to buy some time by proceeding with the previously planned gradual tapering in April...while increasing flexibility in the forward guidance to allow more room to act once the immediate fog lifts."

©Photo: Wall Street Journal