He European Central Bank (ECB), as expected, kept benchmark interest rates and the purchase program unchanged. The euro appreciated modestly after the decision was made known.
“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. The Governing Council expects the ECB’s official interest rates to continue at current levels, or lower, until it sees a solid convergence of inflation outlooks to a level close enough to, although below, 2% on its horizon of projection, and this convergence has been reflected in a consistent way in the evolution of the underlying inflation ”, informed the ECB in the communiqué accompanying the decision.
With regard to the purchase program, the ECB “continue purchases under the Pandemic Emergency Purchase Program (PEPP) cwith a total endowment of € 1,850 billion. The Governing Council will make net purchases of assets under the PEPP at least until the end of March 2022 and, in any case, until it considers that the crisis phase of the coronavirus is over. ” The crew can be recalibrated in case they see it necessary. Net purchases under the Asset Purchase Program (APP) will continue at a monthly rate of € 20 billion.
He ECB will continue to reinvest capital of the expiring assets of the different purchasing programs.
“He Governing Council will continue to provide abundant liquidity through its financing operations. In particular, the third series of longer-term financing operations with a specific objective (TLTRO III) continues to be an attractive source of financing for credit institutions, which supports bank credit to companies and households ”, said the ECB.
The Governing Council concluded by stating that they are prepared to adjust all instruments appropriately, “In order to ensure that inflation advances towards its objective in a sustained manner, in accordance with its commitment to symmetry.”
At 13:30 GMT, Christine Lagarde will hold a press conference. There the euro could become more volatile. It is trading near 1.2150, in the zone of the highs of the day.
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