The European Central Bank broke the longest streak of interest rate hikes in its 25-year history on Thursday, saying the latest data continued to point to inflation slowly coming down to its 2% target.
“The Governing Council’s past interest rate increases continue to be transmitted forcefully into financing conditions,” the ECB said. “This is increasing and thereby helps push down inflation.” This sharp policy tightening is leaving a mark on the economy, with data earlier this week showing weak credit creation and economic activity.
The ECB sees PEPP as a first line of defence against market turbulence, despite some policymakers’ clamouring for an early end to its last surviving bond-buying scheme.
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