European Central Bank maintains rates and announces end of purchase program in the third quarter

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The European Central Bank (ECB) kept benchmark interest rates unchanged after the Governing Council meeting as expected. The bank adjusted its purchase program, indicating that it will end in the third quarter.

Changes in perspective and end of purchasing program

In the first paragraph of the statement the central bank referred to the “Russian invasion of Ukraine”, and gave its full support to the people of Ukraine. He also indicated that he will ensure liquidity conditions and compliance with sanctions.

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As expected, the ECB kept interest rates unchanged. The interest rate of the main financing operations and the interest rates of the marginal credit facility and the deposit facility will remain at 0.00%, 0.25% and −0.50%, respectively.

Regarding the purchasing program, the ECB changed the schedule based on the uncertainty and the new scenario. Total purchases by the purchase program (APP) will be 40,000 million euros in April, 30,000 million in May and 20,000 million in June. From there, they will depend on the data, which if in line with expectations, will lead to the culmination of net purchases. In the event of changes, the ECB affirms that it is ready to review the schedule and the amounts.

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The emergency purchase program will be discontinued at the end of March.

Enter the most relevant news of the press release, is the removal of the phrase “the Governing Council expects net purchases to end shortly before interest rates start to rise”.

The euro soared after the decision and reached market-wide highs, becoming the best performing coin of the day. At 13:30 GMT, Christine Lagarde will give a press conference. The volatility in the euro crosses could remain high until the end of it.

Source: Fx Street

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