Relations between Russia and NATO countries have tensed further as the U.S. has accused Russia of plotting a coordinated operation to precipitate an invasion. In another news, the European Central Bank has released its monetary policy proposals, which suggest that it intends to keep interest rates unchanged while lowering asset purchases.
Russia And Ukraine Conflicts
The White House alleged Russia is plotting a Ukrainian-led attack on Russian soil to use it as a pretext for invading the country. The commercial might involve “visual sequences of a bogus explosion with corpses,” according to the Biden administration’s statements on the subject on Thursday.
Russia and Ukraine’s growing uncertainty has also impacted the stock market. The S& P 500 index dropped more than 111 points, closing 2.44 percent lower. The Nasdaq lost even more ground, dropping more than 538 points and 3.74 percent at the market close.
Monetary Policy Of The European Central Bank
On Thursday, the European Central Bank (ECB) issued new statements about continuing monetary policy and addressing inflation. It disclosed that it would slow down asset purchases in the first quarter of 2022 to stop asset acquisitions by the end of March 2022.
Inflation rates are fast-rising over the globe, especially in the Eurozone, where consumer prices increased by 5.1 percent year over year at the end of January. The European Central Bank said that interest rates would remain unchanged between -0.50 percent and 0.25 percent despite stable inflation. “This might potentially imply a period of transition during which inflation is substantially over the goal,” the ECB said in a statement.
The Bottom Line
Markets are anxious as they wait for the Federal Reserve to raise interest rates and reduce asset purchases. The friction between the West and Russia adds to the strain, leading to a very dramatic drop if the situation worsens. Investors should anticipate future volatility.