MNI BRIEF: No APP Change Until Ukraine Impact Clear - Panetta

Acute uncertainty caused by Russia’s invasion of Ukraine means the ECB should adopt a light touch to normalising monetary policy, Executive Board member Fabio Panetta said in a speech Monday, warning that it would unwise to to pre-commit on future policy steps -- including a change in the pace of APP -- until the fallout from the current crisis becomes clearer.

Greater short-term financial volatility and renewed risk of market dislocations could be felt unevenly across the euro area, threatening the smooth transmission of monetary policy at a time when the growth outlook is already fragile, in part due to rising imported inflation and high energy prices, he said.

“The danger of high inflation becoming entrenched seems contained at the moment. [...] Once the current crisis has abated, ensuring that monetary policy accompanies the recovery with a light touch may be consistent with a further adjustment in our net asset purchases.”