The ECB Leaves Rates Unchanged

Just like the BoC on Wednesday, the ECB left rates unchanged as anticipated...

Here are the key points:

• Deposit rate unchanged at -0.50%, interest rate unchanged at 0%, marginal lending rate unchanged at 0.25%

• They will continue to conduct net asset purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1,850 billion until at least the end of March 2022 and, until it judges that the coronavirus crisis phase is over.

• The Governing Council expects purchases under the PEPP over the next quarter to be conducted at a significantly higher pace than during the first months of this year.

• The flexibility of purchases over time, across asset classes and among jurisdictions will continue to support the smooth transmission of monetary policy.

• If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the PEPP, the envelope need not be used in full.

• The Governing Council will continue to reinvest the principal payments from maturing securities purchased under the PEPP until at least the end of 2023

• Net purchases under the asset purchase programme (APP) will continue at a monthly pace of €20 billion.

• The Governing Council continues to expect monthly net asset purchases under the APP to run for as long as necessary and to end shortly before it starts raising the key ECB interest rates.

• The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2%.

• In particular, the third series of targeted longer-term refinancing operations (TLTRO III) remains an attractive source of funding for banks.

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