In line with the Governing Council’s strong commitment to its price stability mandate, the Governing Council took further key steps to make sure inflation returns to its 2% target over the medium term. The Governing Council decided to raise the three key ECB interest rates by 50 basis points and approved the Transmission Protection Instrument (TPI).
The Governing Council decided to raise the three key ECB interest rates by 50 basis points. Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 0.50%, 0.75% and 0.00% respectively, with effect from 27 July 2022.
The Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates and, in any case, for as long as necessary to maintain ample liquidity conditions and an appropriate monetary policy stance.
As concerns the PEPP, the Governing Council intends to reinvest the principal payments from maturing securities purchased under the programme until at least the end of 2024. In any case, the future roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance.
The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises at its 2% target over the medium term. The Governing Council’s new TPI will safeguard the smooth transmission of its monetary policy stance throughout the euro area.
Japan’s economy is likely to recover toward the middle of the projection period, with the
impact of the pandemic and supply-side constraints waning, although it is expected to be under downward pressure stemming from a rise in commodity prices due to factors such as the situation surrounding Ukraine. Thereafter, as a virtuous cycle from income to spending intensifies gradually, Japan’s economy is projected to continue growing at a pace above its potential growth rate.
Comparing the projections with those presented in the previous Outlook for Economic Activity and Prices (Outlook Report), the projected growth rate for fiscal 2022 is lower due to the effects of such factors as a slowdown in overseas economies and intensification of supply-side constraints. However, the projected growth rates thereafter are somewhat higher, partly owing to a rebound from the lower projection for fiscal 2022. The projected rates of increase in the CPI are higher, mainly for the near term, reflecting the impact of a rise in import prices and of a pass-through of that rise to consumer prices.
With regard to the risk balance, risks to economic activity are skewed to the downside for the time being but are generally balanced thereafter. Risks to prices are skewed to the upside for the time being but are generally balanced thereafter.
In Canada retail sales increased 2.2% to $62.2 billion in May, recording the fifth consecutive increase. Sales were up in 8 of 11 subsectors, representing 86.8% of retail trade. Sales were led by higher sales at gasoline stations and motor vehicle and parts dealers.
Core retail sales—which exclude gasoline stations and motor vehicle and parts dealers—increased 0.6%. In volume terms, retail sales were up 0.4% in May.
Given the continually evolving economic situation, Statistics Canada is providing an advance estimate of retail sales, which suggests that sales increased 0.3% in June. Owing to its early nature, this figure will be revised. This unofficial estimate was calculated based on responses received from 42.3% of companies surveyed. The average final response rate for the survey over the previous 12 months has been 91.7%.