Christine Lagarde, President of the European Central Bank (ECB), arrived in Brussels, Belgium on December 2, 2019 to testify before the European Parliament’s Committee on Economic and Monetary Affairs.
Francois Lenoir | Reuters
LONDON – The European Central Bank on Thursday extended its major monetary stimulus program by another 500 billion euros (60 605 billion) as another wave of lockdown measures weighs on the euro area’s economic recovery.
In markets mostly the central bank expected an increase in its bond purchases, promising to “improve its instruments” in October, as cases of coronavirus resurfaced in the continent, leading to further national shutdowns.
The ECB kept interest rates at 0.00%, 0.25% and -0.50% on its main refinancing operations, marginal lending facility and deposit facility, respectively.
Following the epidemic, the central bank launched its Epidemic Emergency Purchase Program (PEPP) to boost the bloc’s economy. Following Thursday’s expansion, the total asset purchase value is 1.85 trillion euros, and the ECB has extended the horizon for purchases under PEPP to March 2022.
In a statement following the decision, the ECB said its governing council judge would make a net purchase until the “coronavirus crisis phase is over” and interest rates would remain at their current lows until the central bank sees inflation. Outlook makes a “strong conversion” to its “near, but below” target of 2%.
The Governing Council has also chosen to “background” the third edition of its targeted long-term refinancing operation (TLTRO III), an extremely affordable loan for banks, extending the current favorable terms to lenders for 12 months until June 2022.
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