ECB's Knot: ECB weighing options to ease transition out of PEPP

European Central Bank (ECB) policymaker Klaas Knot said on Thursday that the inflation outlook for the euro area is back on track, as reported by Reuters.

Additional takeaways

“Risks for headline inflation are tilted to the upside.”

“Upside inflation risks are mainly linked to more persistent supply-side bottlenecks and stronger domestic wage-price dynamics.”

“Welcoming rise in market-based inflation expectations.”

“Current baseline projections consistent with ending the Pandemic Emergency Purchase Programme (PEPP) in March 2022.”

“Confident that the pre-pandemic inflation gap in our macroeconomic projections will close by the end of this year.”

“ECB weighing options to ease the transition out of the PEPP.”

Market reaction

The EUR/USD pair showed no immediate reaction to these comments and was last seen posting small daily gains at 1.1600.