Soaring inflation rates push Europe toward end of central bank stimulus.

The European Central Bank reaffirmed its plan on Thursday to end its bond-buying stimulus later this year, but said it wanted to keep its options open for future policy decisions as the war in Ukraine strains the region’s economy, pushing prices up and raising concerns about a slowdown.

The central bank held interest rates at record low levels and said any eventual increases would be gradual.

The bank is trying to strike a difficult balance. On the one hand, high inflation means it has the room to withdraw stimulus. But the worsening economic growth outlook poses risks to efforts to tighten monetary policy, because those measures could cool the economy too much and instigate a recession.

“Russia’s aggression in Ukraine is causing enormous suffering,” the bank said in its policy statement on Thursday. “It is also affecting the economy, in Europe and beyond.”

Prices in the eurozone rose 7.5 percent in March from a year earlier, to levels not seen in four decades, and far exceeding the central bank’s 2 percent target. “Inflation has increased significantly and will remain high over the coming months, mainly because of the sharp rise in energy costs,” the bank said.

While the region’s economy is being supported by reopening after pandemic lockdowns, the war in Ukraine was “weighing heavily on the confidence of businesses and consumers,” the bank said. Trade disruptions were leading to new shortages of materials, and surging energy and commodity prices were holding back production, it added.

Fears about the future of the economy are particularly stark in Germany, Europe’s largest economy, because of its heavy reliance on Russian energy. Late last month economic advisers to the German government said the outlook had “worsened sharply” because of the war, with a heightened risk of recession alongside high inflation rates.

Still, pressure is being heaped on the central bank to take more action against inflation, and traders are betting interest rates will rise before the end of the year. Earlier this month, after the eurozone inflation data turned out to be higher than expected, Joachim Nagel, the president of Germany’s Bundesbank, said that monetary policy “should not pass up the opportunity for timely countermeasures.”

At the European Central Bank’s meeting in March, policymakers said they would seek to end the bank’s bond-buying program in the third quarter, a necessary prerequisite to raising interest rates. On Thursday, the bank reinforced this intention.

After 1.7 trillion euros ($1.85 trillion) in bond purchases, the central bank stopped growing its pandemic-era asset-purchase program in March. But it continued an older bond-buying program. This month, it expects to make €40 billion in purchases, followed by €30 billion in May and €20 billion in June.

But interest rates are so low in the eurozone that even when rates start to rise, policy will probably still be accommodative. The central bank’s deposit rate, what banks receive for depositing money with the central bank overnight, is minus 0.5 percent.

“In the current conditions of high uncertainty, the governing council will maintain optionality, gradualism and flexibility in the conduct of monetary policy,” the bank said on Thursday.

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