The European Central Bank left its key interest rates unchanged on Thursday and unveiled a faster winding down of its asset purchase programme than expected as soaring inflation outweighed concerns around Ukraine war.
With inflation in the eurozone already at a record high of 5.8 per cent in February, and the potential for an even higher reading this month, the central bank was under pressure to act to keep prices in line with its 2 per cent target.
Calling Ukraine war a “watershed” moment for Europe, the bank pledged to slow bond buying from the start of May, and said it could halt the programme as soon as the third quarter.
“The Governing Council expresses its full support to the people of Ukraine. It will ensure smooth liquidity conditions and implement the sanctions decided by the European Union and European governments,” the ECB said.
“The Governing Council will take whatever action is needed to fulfil the ECB’s mandate to pursue price stability and to safeguard financial stability.”
The hawkish move came as a surprise for investors who had expected the ECB to keep its options open until there is more clarity about the war, the impact of sanctions and the future course of commodity prices.
In Thursday's decision, the bank confirmed plans to wrap up its €1.85 trillion ($2.04tn) Pandemic Emergency Purchase Programme at the end of the month and said purchases under the older Asset Purchase Programme (APP) will be smaller than previously planned.
It now expects APP purchases to total €40 billion in April, €30bn in May and €20bn in June. Previously it set purchases at €40bn in the second quarter, €30bn in the third quarter and €20bn in the fourth quarter.
“The ECB’s monetary policy statement signalled it is more concerned about a further sharp rise in inflation than the negative shock to demand which will result from the war in Ukraine,” said Paul Dales, chief UK economist at Capital Economics.
“Far from delaying its planned policy tightening, the Bank has accelerated the pace of its taper and may end net purchases completely in Q3. This would pave the way for rate hikes in the second half of the year.”
While the central bank opted to leave its main refinancing rate at 0 per cent, and its deposit facility rate remained at 0.5pc, the bank said it plans to increase interest rates “some time” after the end of net asset purchases rather than “shortly after”.
ECB President Christine Lagarde said the ECB had no intention of raising interest rates until some time after it has ended its bond buying at the end of the third quarter.
“Any adjustment to the key ECB interest rates will take place some time after the end of our net purchases under the APP [Asset Purchase Programme] and will be gradual,” Ms Lagarde said.
“The path for the key ECB interest rates continues to be determined by the Governing Council's forward guidance and by its strategic commitment to stabilise inflation at 2 per cent over the medium term.”
The euro gained ground against the dollar following the announcement, briefly topping $1.1100 before easing back.
Markets now see around 43 basis points' worth of interest rate hikes this year, up from around 30 basis points predicted before the meeting.
“All in all, today’s decisions are a good compromise, keeping maximum flexibility in a very gradual normalisation of monetary policy,” said ING economist Carsten Brzeski.
“A first rate hike before the end of the year is still possible.”
Although the ECB's move came as a surprise, policy normalisation was still seen as unavoidable.
Inflation across the 19 countries that use the euro could be three times the ECB's 2 per cent target this year and is likely to remain elevated next year, too.
A rebound in economic growth and the tightest labour market in decades are also pushing the ECB to abandon its ultra-easy policy stance and end a near decade-long experiment with unconventional stimulus.
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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Profile
Company: Justmop.com
Date started: December 2015
Founders: Kerem Kuyucu and Cagatay Ozcan
Sector: Technology and home services
Based: Jumeirah Lake Towers, Dubai
Size: 55 employees and 100,000 cleaning requests a month
Funding: The company’s investors include Collective Spark, Faith Capital Holding, Oak Capital, VentureFriends, and 500 Startups.
THE BIO
Ms Davison came to Dubai from Kerala after her marriage in 1996 when she was 21-years-old
Since 2001, Ms Davison has worked at many affordable schools such as Our Own English High School in Sharjah, and The Apple International School and Amled School in Dubai
Favourite Book: The Alchemist
Favourite quote: Failing to prepare is preparing to fail
Favourite place to Travel to: Vienna
Favourite cuisine: Italian food
Favourite Movie : Scent of a Woman
Mohammed bin Zayed Majlis
Killing of Qassem Suleimani
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UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
UAE currency: the story behind the money in your pockets
England's Ashes squad
Joe Root (captain), Moeen Ali, Jimmy Anderson, Jofra Archer, Jonny Bairstow, Stuart Broad, Rory Burns, Jos Buttler, Sam Curran, Joe Denly, Jason Roy, Ben Stokes, Olly Stone, Chris Woakes.
BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
Killing of Qassem Suleimani
KILLING OF QASSEM SULEIMANI
Why are asylum seekers being housed in hotels?
The number of asylum applications in the UK has reached a new record high, driven by those illegally entering the country in small boats crossing the English Channel.
A total of 111,084 people applied for asylum in the UK in the year to June 2025, the highest number for any 12-month period since current records began in 2001.
Asylum seekers and their families can be housed in temporary accommodation while their claim is assessed.
The Home Office provides the accommodation, meaning asylum seekers cannot choose where they live.
When there is not enough housing, the Home Office can move people to hotels or large sites like former military bases.
Killing of Qassem Suleimani
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Company Profile:
Name: The Protein Bakeshop
Date of start: 2013
Founders: Rashi Chowdhary and Saad Umerani
Based: Dubai
Size, number of employees: 12
Funding/investors: $400,000 (2018)
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
Mohammed bin Zayed Majlis
Most sought after workplace benefits in the UAE
- Flexible work arrangements
- Pension support
- Mental well-being assistance
- Insurance coverage for optical, dental, alternative medicine, cancer screening
- Financial well-being incentives
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
What is safeguarding?
“Safeguarding, not just in sport, but in all walks of life, is making sure that policies are put in place that make sure your child is safe; when they attend a football club, a tennis club, that there are welfare officers at clubs who are qualified to a standard to make sure your child is safe in that environment,” Derek Bell explains.
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
WOMAN AND CHILD
Director: Saeed Roustaee
Starring: Parinaz Izadyar, Payman Maadi
Rating: 4/5
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