Zürcher Nachrichten - ECB reckons with impact of war on eurozone's doorstep

EUR -
AED 4.313975
AFN 80.547545
ALL 97.434934
AMD 449.73046
ANG 2.102303
AOA 1077.171324
ARS 1492.791377
AUD 1.764031
AWG 2.116752
AZN 2.0016
BAM 1.955498
BBD 2.367734
BDT 143.357833
BGN 1.955498
BHD 0.442932
BIF 3495.35953
BMD 1.174668
BND 1.502568
BOB 8.102747
BRL 6.532923
BSD 1.172619
BTN 101.493307
BWP 15.744565
BYN 3.837607
BYR 23023.499991
BZD 2.355536
CAD 1.60865
CDF 3393.617337
CHF 0.934453
CLF 0.028651
CLP 1114.547663
CNY 8.403625
CNH 8.419418
COP 4775.561579
CRC 592.408399
CUC 1.174668
CUP 31.128712
CVE 110.247953
CZK 24.57048
DJF 208.817712
DKK 7.463496
DOP 71.148999
DZD 152.157473
EGP 57.684081
ERN 17.620026
ETB 163.190867
FJD 2.634488
FKP 0.874805
GBP 0.874465
GEL 3.18381
GGP 0.874805
GHS 12.254105
GIP 0.874805
GMD 84.57654
GNF 10176.42647
GTQ 9.000608
GYD 245.342064
HKD 9.220682
HNL 30.706252
HRK 7.537617
HTG 153.886205
HUF 396.850416
IDR 19217.339549
ILS 3.939608
IMP 0.874805
INR 101.616219
IQD 1536.162471
IRR 49468.226083
ISK 142.276286
JEP 0.874805
JMD 187.051077
JOD 0.832886
JPY 173.446879
KES 151.506573
KGS 102.553011
KHR 4697.273684
KMF 491.603168
KPW 1057.221015
KRW 1624.959912
KWD 0.358662
KYD 0.977249
KZT 639.001194
LAK 25279.09122
LBP 105069.953557
LKR 353.815291
LRD 235.113646
LSL 20.812382
LTL 3.468491
LVL 0.710546
LYD 6.330021
MAD 10.545169
MDL 19.72395
MGA 5179.199166
MKD 61.550483
MMK 2465.733848
MNT 4216.363074
MOP 9.481134
MRU 46.800763
MUR 53.342135
MVR 18.094285
MWK 2033.385588
MXN 21.791567
MYR 4.958867
MZN 75.131746
NAD 20.812382
NGN 1799.510154
NIO 43.153327
NOK 11.939518
NPR 162.388891
NZD 1.952022
OMR 0.45153
PAB 1.172619
PEN 4.153358
PGK 4.860248
PHP 67.132737
PKR 332.301418
PLN 4.249143
PYG 8783.641829
QAR 4.274539
RON 5.067641
RSD 117.131888
RUB 93.245282
RWF 1695.037905
SAR 4.407892
SBD 9.732239
SCR 16.61843
SDG 705.392672
SEK 11.182226
SGD 1.503815
SHP 0.923105
SLE 26.959075
SLL 24632.212956
SOS 670.196371
SRD 43.067458
STD 24313.263549
STN 24.496212
SVC 10.260413
SYP 15272.941179
SZL 20.804783
THB 38.024448
TJS 11.198868
TMT 4.123086
TND 3.423471
TOP 2.751195
TRY 47.660213
TTD 7.973767
TWD 34.632517
TZS 3004.935362
UAH 49.031718
UGX 4204.349902
USD 1.174668
UYU 46.972737
UZS 14837.70572
VES 141.281363
VND 30711.704452
VUV 140.295141
WST 3.217414
XAF 655.855588
XAG 0.030777
XAU 0.000352
XCD 3.1746
XCG 2.113373
XDR 0.815674
XOF 655.855588
XPF 119.331742
YER 283.036769
ZAR 20.886665
ZMK 10573.429114
ZMW 27.351771
ZWL 378.242735
  • RBGPF

    -1.1200

    73.88

    -1.52%

  • SCS

    0.0700

    10.58

    +0.66%

  • CMSD

    0.0400

    22.89

    +0.17%

  • GSK

    -0.2600

    37.97

    -0.68%

  • RELX

    -0.9800

    52.73

    -1.86%

  • BCC

    1.7100

    88.14

    +1.94%

  • CMSC

    0.0550

    22.485

    +0.24%

  • NGG

    -0.0800

    72.15

    -0.11%

  • RIO

    -0.7300

    63.1

    -1.16%

  • SCU

    0.0000

    12.72

    0%

  • BTI

    -0.3700

    52.25

    -0.71%

  • BP

    0.0700

    32.2

    +0.22%

  • BCE

    -0.2300

    24.2

    -0.95%

  • JRI

    -0.0600

    13.09

    -0.46%

  • VOD

    -0.0900

    11.43

    -0.79%

  • RYCEF

    -0.0400

    13.2

    -0.3%

  • AZN

    -1.0200

    72.66

    -1.4%

ECB reckons with impact of war on eurozone's doorstep
ECB reckons with impact of war on eurozone's doorstep

ECB reckons with impact of war on eurozone's doorstep

Russian President Vladimir Putin's invasion of Ukraine has added an extra layer of complexity to the decisions facing European Central Bank policymakers as they meet on Thursday.

Text size:

Already managing record inflation figures and a fragile recovery from the impact of the coronavirus pandemic, members of the bank's 25-member governing council now have to reckon with the impact of war on the edge of the eurozone.

The pace of consumer price rises shifted up a gear in February, rising to 5.8 percent from 5.1 percent the previous month, a new all-time high for the euro area.

The spike has been driven in no small part by soaring prices for energy, caught in the middle of the conflict with Russia, a major supplier to European countries.

ECB President Christine Lagarde responded to the February 24 invasion by saying the central bank would "take whatever action is necessary" to stabilise the euro region's economy.

Prices for gas and oil were "likely in the short term to increase inflation", she said, sustaining it for longer than the bank previously expected.

- Stepwise -

Soaring inflation has put the ECB under pressure to follow its peers in the United States and Britain by moving to end its economic stimulus and raise interest rates soon.

At its last meeting at the beginning of February, the ECB left its plan for a "step-by-step" reduction in its asset-purchasing programmes untouched.

The pandemic emergency bond-buying programme, which has been the ECB's main crisis-fighting tool, aimed at keeping borrowing costs low to stoke economic growth, will come to an end in March.

Under the current guidance, a separate pre-pandemic bond-buying scheme will be boosted to 40 billion euros ($44 billion) monthly in the near term and carry on till at least October.

Any policy tweaks were pushed back to the meeting this week, when the governing council will make use of new economic forecasts to support their decision making.

In December, when the figures were last updated, the bank foresaw inflation at 1.8 percent in 2023, below its two-percent target.

The new inflation projections, which will take account of the Ukraine conflict and the most recent data, could see a sharp upwards revision.

The outlook was however shrouded in "significant uncertainty", ECB executive board member Isabel Schnabel said after Russian tanks moved on Ukraine.

At the same time, the high cost for energy was likely to weigh on the economy and slow production, narrowing policymakers' room for manoeuvre.

The double risk will encourage the ECB to "tread carefully", said Andrew Kenningham of Capital Economics.

It will also encourage the bank to give a signal it "could even step up support if needed", he added.

- Normalisation? -

In Russia, where the economy is reeling from Western sanctions, central bankers propped up the ruble by more than doubling the main interest rate to 20 percent.

Such high levels are completely alien to the ECB which has long kept its rates at historic lows, including a negative deposit rate that effectively charges banks to park their cash overnight.

But more "hawkish" members of the governing council who would like to see the ECB act faster have grown more vocal.

Inflation fears meant policymakers needed to keep their "sights trained on the normalisation of our monetary policy", Bundesbank chief and governing council member Joachim Nagel said.

Observers will be listening closely to Lagarde's news conference at 14:30 local time (1330 GMT) to see if the former French finance minister makes any advance on her pledge for the ECB to be "data-driven".

Lagarde's previous insistence that any hike in 2022 was "very unlikely" disappeared after the February meeting, as markets bet on an earlier increase.

In light of the tense situation in Europe, "the ECB will want to avoid hinting at end dates" for its bond-buying "or start dates for rate hikes", said Carsten Brzeski, head of macro at the bank ING.

Instead, Lagarde could follow her predecessors to "never pre-commit", Brzeski said.

U.Ammann--NZN