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The Governing Council of the European Central Bank (ECB) decided this Thursday not to strengthen or extend the time horizon of the Pandemic Emergency Procurement Program (PEPP), in line with most analysts, which anticipated new measures for the meeting of December.
The ECB acknowledged in a statement that there are risks in the current situation and indicated that it will “carefully” analyze the information, which included “the dynamics of the pandemic, the projections for the distribution of a vaccine and the evolution of exchange rates. “Of the euro.
“The new projections for December will allow for a reassessment of perspective and risk calibration. Based on this reassessment, the Board of Governors will recalibrate its tools, as appropriate, to respond to developments in the situation and to ensure that financing conditions remain favorable to support economic recovery and counter the adverse effects of the pandemic on anticipated developments. . inflation ”, reads the note.
For the third time in a row, the ECB has decided to leave everything as it is. The last time Frankfurt reloaded the PEPP, which started in March, came in the wake of the June meeting, when it strengthened its asset purchasing power from € 750 billion to € 1.35 billion and extended it. another six months, until June 2021.
Launched to stimulate the economy and smoothly transmit monetary policy, the PEPP consists of a purchase of public and private assets by the ECB which has eliminated a limit that marked the firepower of its predecessor program – the Asset Purchase Program (APP), launched by Mario Draghi in 2015. The APP was limited to the purchase of up to 33% of the debt issued by each country, a limit that was not part of the configuration of Christine Lagarde’s PEPP, precisely to allow transmission fluid monetary policy in all jurisdictions the euro zone.
Interest rates remained unchanged, with the interest rate applicable to the main refinancing operations and the interest rates applicable to the liquidity facility and central bank deposits remaining at 0%, 0.25% and -0, 5%, respectively.
The ECB also maintained the monthly pace of purchases under the JPA, at € 2 billion, along with further purchases of € 120 billion that are part of a temporary envelope, until the end of the year.
There is also another instrument, TLTRO, which remains an interesting source of financing for banks, to support the granting of credit to companies and families.
Attention now goes to the conference by Christine Lagarde, president of the ECB, at 1.30pm.
(updated 12:59 pm)
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