Delivery times have lengthened considerably, and transport costs and energy prices have surged. That said, shortages of materials, equipment and labour are holding back the manufacturing sector. The recovery in domestic and global demand is also supporting production and business investment. But higher energy prices may reduce purchasing power in the months to come. This is supporting consumer spending, especially on entertainment, dining, travel and transportation. The grip of the pandemic on the economy has visibly weakened, with restrictions being lifted as a result of successful health measures and large numbers of people now vaccinated. We still expect output to exceed its pre-pandemic level by the end of the year. The economy continued to grow strongly in the third quarter, even though momentum moderated to some extent. I will now outline in more detail how we see the economy and inflation developing and will then talk about our assessment of financial and monetary conditions. We stand ready to adjust all of our instruments, as appropriate, to ensure that inflation stabilises at our two per cent target over the medium term. We also confirmed our other measures, namely the level of the key ECB interest rates, our forward guidance on their likely future evolution, our purchases under the asset purchase programme (APP), our reinvestment policies and our longer-term refinancing operations, as detailed in the press release published at 13:45 today. We continue to judge that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases under the pandemic emergency purchase programme (PEPP) than in the second and third quarters of this year. Favourable financing conditions are essential for the economy to continue its recovery and to counter the negative impact of the pandemic on the inflation path.
However, overall financing conditions currently remain favourable for firms, households and the public sector. Market interest rates have increased since our last meeting in early September. We foresee inflation rising further in the near term, but then declining in the course of next year. Inflation is rising, primarily because of the surge in energy prices but also as the recovery in demand is outpacing constrained supply. But shortages of materials, equipment and labour are holding back production in some sectors. Consumers continue to be confident and their spending remains strong. The euro area economy continues to recover strongly, although momentum has moderated to some extent.
Good afternoon, the Vice-President and I welcome you to our press conference. Luis de Guindos, Vice-President of the ECBįrankfurt am Main, 28 October 2021 Jump to the transcript of the questions and answers
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