ECB Executive Board member Isabel Schnabel said in a speech, “how today’s attack on Ukraine changes the euro area outlook is highly uncertain at this stage. We are monitoring the situation closely and will carefully evaluate the consequences for our policies.”

But “predating the war”, however, inflationary pressures will likely prove stronger and more persistent over both the near and the medium term”. “policy optionality” is there fore needed.

The “calibration and the time of adjustment of our policy instruments are data-dependent”, but the “sequence… is not”. The forward guidance has provided the conditions for policy rates to be raised. Net purchases under the APP will stop “shortly before” rate hikes. Reinvestment will continue for an “extended period of time” past rate hikes.

Balance sheet adjustments may not be well-suited as the main instrument for controlling the overall stance. Hence “policy lift-off will predate with some distance a reduction of our balance sheet.”

Overall, she concluded, the “shock of war hanging over Europe has clouded the global outlook”. The “uncertainty speaks in favour of a gradual and data-dependent normalisation that respects the sequence that we have communicated, with a view to reducing uncertainty about our actions and intentions.”

Full speech here.

ECB Governing Council member Yannis Stournaras said in a Reuters interview that the asset purchase program should continue until at least the end of the year, to cushion the fallout from the Ukraine crisis.

He said, “judging the situation from today’s point of view, I would rather favour a continuation of the APP at least until the end of the year, beyond September, rather than bringing the end closer… I wouldn’t be in favour of announcing the end of APP in March.”

Stournaras added that the crisis was bound to depress prices “in the medium to long term” after an initial spike.”In my view it is going to have a short-term inflationary effect – that is prices will increase due to higher energy costs,” he said. “But in the medium to long term I think that the consequences will be deflationary through adverse trade effects and of course through the rise in energy prices.”