The European Central Bank will persist with record low interest rates until inflation in the eurozone reaches the ECB's 2 per cent goal.
Inflation has lagged below that level for much of the past decade and the target has slipped farther from its grasp since the Covid-19 pandemic began.
ECB president Christine Lagarde gave a warning that the spread of the Delta variant had led to growing economic uncertainty, as the bank kept up its major stimulus.
"The euro area economy is rebounding strongly," Ms Lagarde said on Thursday.
"But the pandemic continues to cast a shadow, especially as the Delta variant constitutes a growing source of uncertainty."
Ms Lagarde told of the effects of the strain on tourism and hospitality in particular.
"The reopening of large parts of the economy is supporting a vigorous bounce-back in the services sector," she said. "But the Delta variant of the coronavirus could dampen this recovery in services, especially in tourism and hospitality."
Ms Lagarde said the ECB expects economic activity to return to pre-pandemic level in the first quarter of 2022.
She said the guidance on interest rates was made to "underline our commitment to maintain a persistently accommodative monetary policy stance to meet our inflation target".
“The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00 per cent, 0.25 per cent and -0.50 per cent respectively,” the ECB, the central bank of the 19 eurozone countries, said.
Current ECB estimates project that inflation in the eurozone will not reach 2 per cent for at least two years.
“In reaching that target, the governing council expects the key ECB interest rates to remain at their present or lower levels until it sees inflation reaching 2 per cent well before the end of its projection horizon and durably for the rest of the projection horizon, and it judges that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at 2 per cent over the medium term,” the ECB said.
"This may also imply a transitory period in which inflation is moderately above target."
Ms Lagarde said "inflation has picked up, although this increase is expected to be mostly temporary. The outlook for inflation over the medium term remains subdued."
The ECB's previous guidance said it would keep interest rates steady until it was happy that inflation expectations were converging to its target, and stop buying bonds under its quantitative easing programme shortly before that.
The shift in language was prompted by the new strategy unveiled earlier this month, when the ECB pledged to be “especially forceful or persistent” and even let inflation edge above 2 per cent because interest rates are near rock-bottom.
Governors from indebted countries, such as Portugal's Mario Centeno and Italy's Ignazio Visco, say the new strategy means the ECB should keep the money taps wide open for even longer.
But inflation hawks, who support tighter policy and typically come from countries with lower debt-to-gross domestic product (GDP) ratios, such as Germany, have been more cautious, as they expect price pressures to return sooner.
Inflation in Germany is already projected to surpass 2 per cent this year.
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The specs: 2017 Dodge Ram 1500 Laramie Longhorn
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Engine: 5.7L V8
Transmission: Eight-speed automatic
Power: 395hp @ 5,600rpm
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Specs
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Engine: 4.0-litre flat-six
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Astroworld
Travis Scott
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COMPANY PROFILE
Company name: SimpliFi
Started: August 2021
Founder: Ali Sattar
Based: UAE
Industry: Finance, technology
Investors: 4DX, Rally Cap, Raed, Global Founders, Sukna and individuals
The specs: 2018 Jeep Compass
Price, base: Dh100,000 (estimate)
Engine: 2.4L four-cylinder
Transmission: Nine-speed automatic
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COMPANY PROFILE
Name: Mamo Year it started: 2019 Founders: Imad Gharazeddine, Asim Janjua Based: Dubai, UAE Number of employees: 28 Sector: Financial services Investment: $9.5m Funding stage: Pre-Series A Investors: Global Ventures, GFC, 4DX Ventures, AlRajhi Partners, Olive Tree Capital, and prominent Silicon Valley investors. Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
UAE currency: the story behind the money in your pockets
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Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
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Tailors and retailers miss out on back-to-school rush
Tailors and retailers across the city said it was an ominous start to what is usually a busy season for sales.
With many parents opting to continue home learning for their children, the usual rush to buy school uniforms was muted this year.
“So far we have taken about 70 to 80 orders for items like shirts and trousers,” said Vikram Attrai, manager at Stallion Bespoke Tailors in Dubai.
“Last year in the same period we had about 200 orders and lots of demand.
“We custom fit uniform pieces and use materials such as cotton, wool and cashmere.
“Depending on size, a white shirt with logo is priced at about Dh100 to Dh150 and shorts, trousers, skirts and dresses cost between Dh150 to Dh250 a piece.”
A spokesman for Threads, a uniform shop based in Times Square Centre Dubai, said customer footfall had slowed down dramatically over the past few months.
“Now parents have the option to keep children doing online learning they don’t need uniforms so it has quietened down.”
The Al Barzakh Festival takes place on Wednesday and Thursday at 7.30pm in the Red Theatre, NYUAD, Saadiyat Island. Tickets cost Dh105 for adults from platinumlist.net
THE SPECS
Engine: 4.4-litre V8
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Mohammed bin Zayed Majlis
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Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
The specs
Engine: 2.5-litre, turbocharged 5-cylinder
Transmission: seven-speed auto
Power: 400hp
Torque: 500Nm
Price: Dh300,000 (estimate)
On sale: 2022
Rashid & Rajab
Director: Mohammed Saeed Harib
Stars: Shadi Alfons, Marwan Abdullah, Doaa Mostafa Ragab
Two stars out of five
