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European Central Bank slows its bond purchases as inflation surges

  • Markets had been eagerly awaiting the Frankfurt institution's latest policy decision for signs of an imminent unwinding of pandemic-era stimulus, amid surging inflation and strong economic growth.
  • Euro zone inflation notched a decade high of 3% in August and GDP across the 19-member common currency bloc climbed 2% in the second quarter, exceeding economist expectations.

Christine Lagarde (R), President of the European Central Bank (ECB), and Vicepresident Luis de Guindos (L)Thomas Lohnes | Getty Images News | Getty Images

LONDON — The European Central Bank kept its monetary policy unchanged on Thursday but opted to slow down the pace of net asset purchases under its pandemic emergency purchase program.

The Governing Council voted to maintain the interest rate on the ECB's main refinancing operations at 0%, on the marginal lending facility at 0.25% and on the deposit facility at -0.5%.

"Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council judges that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases under the (PEPP) than in the previous two quarters," the ECB said in a statement.

Markets had been eagerly awaiting the Frankfurt institution's latest policy decision for signs of an imminent unwinding of pandemic-era stimulus, amid surging inflation and strong economic growth.

In a press conference Thursday, ECB President Christine Lagarde said the verdict was a "unanimous decision in all respects."

The euro gained 0.2% against the dollar following the decision to trade at around $1.1837, while European stocks pared earlier losses.

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