FRANKFURT – The European Central Bank said it would accelerate its purchases of eurozone debt after a recent increase in borrowing costs, a surprise decision that diverges from the Federal Reserve as it seeks to support the region’s declining economy.
In a statement after its policy meeting on Thursday, the ECB said it expects to make purchases under a € 1.85 trillion bond purchase program, equivalent to $ 2.2 trillion, at a significantly higher pace. in the next three months than earlier this year. It also left its main interest rates unchanged.
A sharp divergence in the short-term economic outlook between the US and the eurozone has placed the ECB in a more difficult position than the Fed, which recently signaled that it would not attempt to contain an increase in Treasury yields. A slow release of Covid-19 vaccines on the continent has brought about a return to social constraints that are delaying Europe’s recovery from last year’s historic recession, even with a $ 1.9 trillion fiscal stimulus seems destined to boost economic growth in USA.
Meanwhile, the brighter sentiment of investors around the world has been driving up global borrowing costs. This created a headache for ECB officials, who fear that an excessive increase in the cost of financing households and businesses could hamper the region’s recovery before it started.
At a news conference on Thursday, President Christine Lagarde said the ECB was acting to contain an undesirable increase in bond yields, part of which was due to higher growth expectations in the U.S.