The European Central Bank, as expected, kept the benchmark interest rates and the amounts of the purchase program unchanged. He announced the pandemic emergency purchasing program (PEPP) will be accelerated in the next quarter. The euro fell after the statement. Now the focus is on Lagarde’s press conference at 13:30 GMT. The ECB reiterated that it is prepared to adjust all its instruments to ensure that inflation advances towards its objective in a sustained manner.
ECB decisions:
The central bank reported that “it will continue to make net asset purchases under the pandemic emergency purchase program (PEPP) with a total endowment of € 1,850 billion at least until the end of March 2022 and throughout case, until it considers that the crisis phase of the coronavirus is over. ” It stands out that they expect “that the pace of purchases under the PEPP during the next quarter is significantly higher than in the first months of this year.”
Purchases will be made “with flexibility in accordance with market conditions and with a view to avoiding a tightening of financing conditions incompatible with the objective of counteracting the downward impact of the pandemic on the projected inflation path. ” The ECB clarified that if “favorable financing conditions can be maintained with asset purchase flows that do not exhaust the program allocation during the PEPP net purchase horizon, it will not be necessary to use the allocation in its entirety. Likewise, this endowment can be recalibrated if necessary to maintain favorable financing conditions that contribute to counteracting the negative impact of the pandemic on the inflation path. “
Regarding the Asset Purchase Program (APP) indicated that they will continue at a monthly rate of 20,000 million euros.
The ECB it will continue to reinvest the principal of the securities acquired under the purchase programs.
The different interest rates remain unchanged. The interest rate of the main financing operations and the interest rates of the marginal credit facility and the deposit facility at 0.00%, 0.25% and -0.50%, respectively. They will continue like this until “a solid convergence of the inflation outlook is observed to 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. “
The injection through financing operations, particularly with the third series of longer-term financing operations with specific objective (TLTRO III).
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