Why does the ECB keep interest rates at historic lows?

The European Central Bank (ECB) has announced it will roll back its €1.85 trillion ($2.09 trillion) Pandemic Emergency Purchase Program (PEPP). The crisis-era stimulus was launched in March 2020 to ease the impact of the coronavirus pandemic and will wind down in March 2022. “Overall, society has become better at coping with the pandemic waves and resulting constraints. This has lessened the pandemic impact on the economy,” ECB President Christine Lagarde said. But the ECB kept the door open to restart emergency support. Meanwhile, the ECB kept the key interest rate for the currency area of 19 states at a record low of 0%. Critics accuse the ECB of using all the cheap money to fuel inflation. Outgoing Bundesbank President Jens Weidmann had repeatedly warned against underestimating the risk of too high inflation. Monetary policy should “not stick too long to its currently very expansionary course,” he said.