European Central Bank holds tight as inflation soars

FRANKFURT－The European Central Bank on Thursday stood still in the face of record inflation, keeping its stimulus plans and rates unchanged, as the conflict in Ukraine cast a pall over the eurozone economy.

Meeting for the second time since the outbreak of the conflict, the bank's 25-member governing council stuck to a plan that "should" see its bond-buying scheme come to an end in the third quarter.

An interest rate hike would follow "some time" after the stimulus program comes to an end, and any increases "will be gradual".

The decision leaves the ECB further out of step with many of its peers. Central banks such as the Bank of England, US Federal Reserve and the Bank of Canada have already triggered their first interest rate rises in response to soaring inflation.

Calls for the ECB to follow suit as soon as possible from within the governing council have grown stronger as price rises in the eurozone have taken off.

Year-on-year inflation hit 7.5 percent in March, an all-time high for the currency bloc and well above the bank's own 2-percent target.

The surge owes a great deal to the takeoff in prices for energy, commodities and food as a result of Russia's military operation in Ukraine. At the same time, the high cost of oil and gas, as well as added confusion in supply chains threaten to deliver a blow to the economy.

Thursday's meeting probably saw "a lively debate", said Holger Schmieding, an economist at Berenberg Bank, but it was still too soon for the ECB to reach a "major decision".

Joachim Nagel, the head of Germany's traditionally conservative central bank, has previously cautioned against "acting too late".

Any hike would be the ECB's first in over a decade and would lift rates from their current historic low levels.

The Frankfurt-based institution even set a negative deposit rate of minus 0.5 percent, meaning banks pay to park excess cash at the ECB.

Agencies Via Xinhua