The European Central Bank said on Thursday it would slow down the pace of its pandemic-era bond-buying program, one of the main tools it has used to support the eurozone economy through lockdowns, citing â€œfavorable financing conditionsâ€ and the inflation outlook.
The program, which has lately been purchasing about 80 billion euros, or $95 billion, of mostly government bonds each month, is a way to keep borrowing costs low and encourage economic growth.
Other policy measures were left unchanged. Interest rates were held steady, including the so-called deposit rate, which remained at negative 0.5 percent. Policymakers also maintained the size of the bankâ€™s other bond-buying program that was restarted in 2019 to head off a regional recession.
In the eurozone, inflation is rising faster than expected, supply chain disruptions and product shortages are pushing costs higher for manufacturers, and there are early signs that the economic recovery is slowing down.
Itâ€™s a concoction that has created divisions among the central bankâ€™s policymakers about when to slow and then end its enormous bond-buying program. It began in March 2020 as the pandemic spread across Europe, and is meant to buy a total of 1.85 trillion euros in bonds and run until at least next March. The slowdown would help ensure the purchases end on schedule, though the central bank hasnâ€™t ruled out an extension.
â€œBased on a joint assessment of financing conditions and the inflation outlook, the Governing Council judges that favorable financing conditions can be maintained with a moderately lower pace of net asset purchases,â€ the central bank said in statement on Thursday.
Thursdayâ€™s decisions are the first test of the central bankâ€™s updated forward guidance. In July, policymakers said they were willing to overlook short-term jumps in inflation and would raise interest rates only once it was clear the annual inflation rate would reach 2 percent â€œwell aheadâ€ of the end of the central bankâ€™s projection horizon and stay around that level over the medium term.
New projections for inflation and economic growth will be published later on Thursday when the central bankâ€™s president, Christine Lagarde, will hold a press conference.. The previous forecasts, in June, predicted inflation would peak at 2.6 percent in the fourth quarter and decline to 1.5 percent in 2022 and 1.4 percent in 2023.
But inflation has already risen to 3 percent in August, the highest in nearly 10 years, the regionâ€™s statistics agency said last week. So far, policymakers have been betting that the jump in inflation will be temporary, like other central banks around the world.
In recent years preceding the pandemic, the inflation rate was below the bankâ€™s 2 percent target.
â€œThe stars are much better aligned than they have been for a long time for the return of inflation back to 2 percent,â€ Klaas Knot, the governor of the Dutch central bank and a member of the governing council at the European Central Bank, said last week.
Jens Weidmann, the head of the German central bank, said that policymakers shouldnâ€™t ignore the risk of â€œexcessively high inflationâ€ and that they should not â€œcommit to our very loose monetary policy stance for too long.â€
But the European Central Bank as a whole has been more cautious than the Federal Reserve and Bank of England about preparing markets for a return to normal policy. While the economy is rebounding â€” rising 2.2 percent in the second quarter from the first three months of the year â€” Ms. Lagarde has highlighted the uncertainty posed by the spread of the Delta variant.
Recently, Philip Lane, the central bankâ€™s chief economist, said there were headwinds for the economy in the second half of the year, including supply-chain bottlenecks that could be more persistent than expected.
While the pandemic-era bond program might be approaching its end, the central bank is expected to maintain its older bond purchase effort, under which the bank buys 20 billion euros in assets a month. Many analysts expect policymakers to increase the size of purchases to keep providing stimulus to the economy even after the immediate impact of the pandemic has passed.
Lawyers for the government and the defense made their opening statements on Wednesday in the trial of Elizabeth Holmes, the founder of the blood testing start-up Theranos, and a former controller for the company began to testify before the proceedings ended for the day.
The trial will pause for a day and continue on Friday. [Read more about the trialâ€™s opening statements.]
The governmentâ€™s case
Robert Leach, an assistant U.S. attorney, methodically described the times that Theranos came close to going out of business. â€œOut of time and out of money, Elizabeth Holmes decided to lie,â€ he said, in what became a refrain
Mr. Leach described Theranosâ€™s false claims that its technology was being used on battlefields. He showed apparently falsified reports that Ms. Holmes gave to investors from pharmaceutical companies endorsing Theranosâ€™s technology. He said she had peddled wildly exaggerated revenue projections and had used the news media to execute her fraud.
â€œThe scheme brought her fame, it brought her honor, and it brought her adoration,â€ Mr. Leach said.
The defense argued that Ms. Holmes was a hardworking, if naÃ¯ve, entrepreneur who did not succeed but did not commit any crimes.
â€œThe villain the government just presented is actually a living, breathing human being who did her very best each and every day,â€ said Lance Wade, a lawyer with Williams & Connolly who represents Ms. Holmes. â€œTrying your hardest and coming up short is not a crime.â€
Mr. Wade argued that the reality of Theranosâ€™s failure was more complicated than the governmentâ€™s presentation and that the company had built some valuable blood-testing technology.
Interest in the trial was so high that a line began forming to get into the federal courthouse before 5 a.m. Entering the windy alley in front of the courthouse at about 8 a.m., Ms. Holmes was swarmed by camera crews. She was escorted through the scrum by her boyfriend, Billy Evans, and family members.
Curious members of the public also showed up, as did a crew of three blond-haired women in black suits who resembled the defendant. At one point, Mr. Evans and the women in black passed around a padded seat for the courtroomâ€™s hard benches.
Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos, stands trial for two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.
Here are some of the key figures in the case â†’
Wholesale prices for natural gas are at their highest in years â€” nearly five times where they were at this time in 2019, threatening to become a drag on the economies of Europe and elsewhere, Stanley Reed and Raphael Minder report for The New York Times.
Spanish households are paying roughly 40 percent more than what they paid for electricity a year ago as the wholesale price has more than doubled, prompting angry protests against utility companies.
Citing record natural gas prices, Britainâ€™s energy regulatory agency, Ofgem, recently gave utilities a green light to increase the ceiling on energy bills for millions of households paying standard rates by about 12 percent, to 1,277 pounds, or $1,763, a year.
Gas prices in the United States have risen as well, but they are only around a quarter of those being paid in Europe. The United States has a big price advantage over Europe because of its large domestic supply of relatively cheap gas from shale drilling and other activities, while Europe must import most of its gas.
Europe imports around 60 percent of its gas, with supplies coming by pipeline from Russia and to a lesser extent Algeria and Libya. READ THE ARTICLE â†’
The Biden administration wants the nation to move toward producing almost half of its electricity from the sun by 2050.
That was the goal in a new report released on Wednesday by the Energy Department, according to Ivan Penn, one of our energy reporters. To achieve that from the current level of 4 percent, the country would have to double the amount of solar energy installed every year over the next four years and then double it again by 2030.
It is not clear how hard the administration will push to advance solar energy through legislation and regulations. Many details will ultimately be decided by Congress.
Still, the Energy Department said its calculations showed that solar panels had fallen so much in cost that they could produce 40 percent of the countryâ€™s electricity by 2035 â€” enough to power all American homes â€” and 45 percent by 2050.
Solar panels are now the cheapest source of energy in many parts of the country. The use of solar and wind energy has also grown much faster in recent years than most government and independent analysts had predicted.
But getting there will mean trillions of dollars in investments by homeowners, businesses and the government. The electric grid would have to be almost completely remade with the addition of batteries, transmission lines and other technologies that can soak up electricity when the sun is shining and to send it from one corner of the country to another.
Building and installing enough solar panels to generate up to 45 percent of the countryâ€™s power needs will strain manufacturers and the energy industry, increasing demand for materials like aluminum, silicon, steel and glass. The industry will also need to find and train tens of thousands of workers and quickly. Some labor groups have said that in the rush to quickly build solar farms, developers often hire lower-paid nonunion workers rather than the union members Mr. Biden frequently champions.