European Central Bank keeps interest rates and purchase programs unchanged

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The European Central Bank (ECB), as expected, kept benchmark interest rates unchanged. It also made no changes to the Pandemic Emergency Purchase Program (PEPP), which remained at € 1.85 billion until March 2022. The euro appreciated modestly after the announcement.

The The statement contained very few changes from the May meeting, reaffirming that it is ready to adjust all instruments appropriately, so that inflation “advances towards its objective in a sustained manner”. The ECB stated that “it has decided to confirm the very accommodative stance of its monetary policy.”

With regard to interest rates, the “The interest rate on the main financing operations and the interest rates on the marginal credit facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50%, respectively. (…) Until it observes a solid convergence of the inflation outlook towards a level close enough, although below, to 2% in its projection horizon, and this convergence has been consistently reflected in the evolution of core inflation. “

Regarding the purchase program, he indicated that “it will continue to make net purchases of assets within the framework of the pandemic emergency purchasing program (PEPP) with a total endowment of 1,850 billion euros at least until the end of March 2022 and, in any case, until it considers that the crisis phase of the coronavirus is over. ” They expect them to continue in the next quarter at a significantly higher rate than in the first months of the year. The asset purchase program (APP) will continue at a rate of 20,000 million per month.

The ECB will continue to reinvest what you get for your current holdings and providing “abundant liquidity” through its financing operations.

At 12:30 GMT, the president Chirstine Lagarde will give a press conference, explaining the decisions. At the same time, the US retail inflation data for May and the report of requests for unemployment benefits will be published.

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