The Governing Council of the European Central Bank (ECB) decided this Thursday not to reinforce or extend the time horizon of the Pandemic Emergency Purchasing Program (PEPP), in line with most analysts, who anticipated new measures for the meeting of December.
The ECB acknowledged in a statement that there are risks in the current situation and signaled that it will analyze the information “carefully”, which included “the dynamics of the pandemic, the projections for the distribution of a vaccine and the exchange rate developments” of the euro.
“The new projections for December will allow a reassessment of the outlook and risk calibration. Based on this reassessment, the Board of Governors will recalibrate its instruments, in an appropriate manner, to respond to developments in the situation and to ensure that financing conditions remain favorable to support the economic recovery and counteract the negative effects of the pandemic on projected developments. inflation ”, the note reads.
For the third consecutive time, the ECB decided to leave everything as it is. The last time Frankfurt reloaded the PEPP, which started in March, happened in the wake of the June meeting, when it strengthened its asset buying power from 750 billion euros to 1,35 billion euros and extended it another six months, until June 2021.
Launched to stimulate the economy and smoothly transmit monetary policy, the PEPP consists of a purchase of public and private assets by the ECB that eliminated a limit that marked the firepower of its predecessor program - the Asset Purchase Program (APP) , launched by Mario Draghi in 2015. The APP was limited to buying up to 33% of the debt issued by each country, a limit that did not fit into the configuration of Christine Lagarde's PEPP, precisely to allow a smooth transmission of monetary policy in all jurisdictions the euro zone.
Interest rates remained unchanged, with the interest rate applicable to the main refinancing operations and the interest rates applicable to the liquidity-providing facility and the deposit facility remaining at 0%, 0,25% and -0,5%, respectively.
The ECB also maintained the monthly pace of purchases under the APP, at 2 billion euros, together with additional purchases of 120 billion euros that are part of a temporary envelope, until the end of the year.
Another instrument, TLTRO, also remained, as it remains an attractive source of financing for banks, supporting the granting of credit to companies and families.
Attention now turns to the conference of Christine Lagarde, president of the ECB, at 13:30 pm.
(updated at 12:59 pm)