FRANKFURT—The European Central Bank said it would accelerate its purchases of eurozone debt after a recent rise in borrowing costs, a surprise decision that diverges from the Federal Reserve as it seeks to shore up the region’s flagging economy.
In a statement after its policy meeting Thursday, the ECB said it expects to conduct purchases under a €1.85 trillion bond-buying program, equivalent to $2.2 trillion, at a significantly higher pace over the next three months than earlier this year. It also left its key interest rates unchanged.
A sharp divergence in near-term economic prospects between the U.S. and the eurozone has put the ECB in a tougher spot than the Fed, which signaled recently that it wouldn’t seek to stem a rise in Treasury yields. A sluggish rollout of Covid-19 vaccines on the continent has triggered a return of social restrictions that are delaying Europe’s recovery from last year’s historic downturn, even as a $1.9 trillion fiscal stimulus looks set to turbocharge U.S. economic growth.
Meanwhile, brighter investor sentiment around the world has been pushing up global borrowing costs. That has created a headache for ECB officials, who are worried that an excessive increase in household and business financing costs could undermine the region’s recovery before it begins.
At a news conference Thursday, President Christine Lagarde said the ECB was acting to counter an undesirable increase in bond yields, part of which was due to higher growth expectations in the U.S.