ECB holds rates steady and confirms moderate reduction in purchases

No surprise – as predicted by analysts – from the meeting of the Governing Council of the ECB which confirmed all interest rates and reiterated its intention to conduct net purchases of securities in the future under the Pandemic Emergency Purchase Program (Pepp ) at a “moderately slower pace than in the second and third quarters of the year”. The Governing Council – reads the final document – “also confirmed the other measures, namely the level of the reference interest rates of the ECB, the forward guidance on their probable future evolution, the purchases under the Program asset purchase (APP), reinvestment policies and longer-term refinancing operations “. As mentioned, interest rates on main refinancing operations, marginal lending facility and central bank deposits will remain unchanged 0.00%, 0.25% and -0.50% respectively. The purchases of Pepp – which will continue “at least until the end of March 2022 and, in any case, until the Council deems the critical phase linked to the coronavirus concluded” – will be conducted in a flexible manner on deadlines, types and markets “for the purpose to avoid a tightening of financing conditions that are incompatible with the downward effect of the pandemic on the expected inflation profile “and to” support the orderly transmission of monetary policy “. LAGARDE – In the Eurozone “strong growth continues, albeit with a slightly moderate momentum”: the ECB’s forecast is “that activity will return to pre-Covid levels at the end of the year” said ECB President Christine Lagarde introducing the press conference following the Governing Council meeting. In the immediate future, he added, “we see generally balanced risks”. “In the Eurozone – he explained – inflation hit 3.2% in September and we expect a further increase this year, but we expect a decline over the course of the year. of 2022 “. At the base of the growth, he recalled, several factors “starting with energy prices and the recovery of demand” and “the decline will be longer than expected”.