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ECB to weigh more bond buying if war crashes economy -Schnabel -Breaking


© Reuters. FILEPHOTO: Isabel Schnabel is a member of Germany’s advisory board for economic experts and attends the Frankfurt European Banking Congress (EBC), at Frankfurt Old Opera House, Germany on November 22, 2019. REUTERS/Ralph Orlowski/File Photograph

FRANKFURT, (Reuters) – The European Central Bank will consider extending the money printing programme past this summer if there is a recession in the euro area economy due to the conflict with Ukraine. This was stated by Isabel Schnabel on Thursday.

The ECB stated earlier in the month that it would stop its bond-buying stimulation scheme in summer, and will raise interest rates in the following year for first time in more than a decade as it grapples with an unexpected rise in inflation.

Schnabel is the most hawkish board member who runs the ECB.

According to her, “if we now plunge into deep recession because of the Ukraine crisis,” they would have to rethink their plans.

“We will stop bond buying in the third quarter, and once we have done that, rates can be raised at any moment depending on the inflation rate.”

Madis Mueller is the Estonian central banking governor and another hawk of the ECB’s policymaking Governing council. In a Politico interview, Mueller stated that the ECB would not extend its Asset Purchase Programme unless there were “a drastic shift” in inflation outlook.

Mario Centeno from Portugal, a Portuguese peer, warned against the “normalization of the ECB’s monetary policy being carried out slowly and proportionally at end of the year.”

According to the ECB, it anticipates that the economy of euro-zone will grow by 3.7% in 2012. This growth would continue even if Russia was imposed with stricter sanctions or if supply and demand dried up.

For the 19 euro-member countries, the central bank sees inflation at or above its 2% target in this year and next.

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