The European Central Bank will continue asset purchases under its €1.85 trillion ($2.2 trillion) pandemic emergency purchase program at a "significantly higher pace" than before due to financing conditions and the inflation outlook.
The ECB's governing council expects the pace of its purchases to step up for the coming quarter, the central bank said Thursday.
Following a strong rebound in the third quarter of 2020, eurozone real GDP contracted by 0.7% in the three months ended Dec. 31. Real GDP is estimated to have declined by 6.6% in 2020, Christine Lagarde, ECB president, said in a news conference.
Incoming economic data, surveys and high-frequency indicators also point to "continued economic weakness in the first quarter of 2021 driven by the persistence of the pandemic and the associated containment measures. As a result, real GDP is likely to contract again in the first quarter of the year," she said, although vaccination programs across Europe are expected to result in a rebound.
Addressing inflation, Ms. Lagarde said eurozone figures increased sharply to 0.9% in January and February, up from -0.3% in December. The increase reflects a number of factors including higher energy price inflation.