The European Central Bank temporarily boosted regular monthly bond buying for half a year to smooth the exit from pandemic stimulus as President Christine Lagarde unveiled forecasts showing a strong economic rebound along with an outlook for faster inflation.
In a statement that acknowledged the developing threat of the omicron variant, the ECB pledged to briefly double asset purchases to cushion the end of its €1.85 trillion ($2.1 trillion) emergency program in March and avoid what Ms. Lagarde called "a brutal transition." Officials will also revamp that crisis tool to combat future market turmoil.
"The progress on economic recovery and toward our medium-term inflation target permits a step-by-step reduction in the pace of our asset purchases," Ms. Lagarde told reporters Thursday in a virtual press conference in Frankfurt. "Inflation is expected to remain elevated in the near term, but we expect it to decline in the course of next year."
The so-called Asset Purchase Program will double to €40 billion a month, starting in the second quarter, tapering to €30 billion before returning to the existing pace of €20 billion euros in October. ECB officials also changed reinvestment rules around PEPP, making it easier to deploy support in the event of market jitters. Greece, which is excluded from regular bond purchases because of its low credit rating, may receive extra support under the plan.