MILANO – The ECB initiates a ‘moderate’ reduction in interventions launched after the outbreak of the pandemic. This was decided by the Governing Council explaining how “on the basis of a joint assessment of financing conditions and inflation prospects, it believes that favorable financing conditions can be maintained” even “with a pace of net asset purchases under the Purchase program for the pandemic emergency (Pepp) moderately lower than in the previous two quarters.
The Eurotower board confirmed the capacity and horizon of the Pepp, which remains at 1,850 billion and which will be continued until March 2022 or until the end of the pandemic crisis. A reduction in purchases that the market had taken into account after the hawkish front had grown in recent weeks, with the request for a partial reduction in aid by the ECB. At today’s meeting, the Board left interest rates unchanged: the main rate remains at zero, the deposit rate at -0.50% and the marginal loan rate at 0.25%.
Lagarde: “It’s not tapering. Recovery stronger and stronger, pre-Covid levels at the end of the year”
“What we are doing is not a tapering, we are recalibrating the Pepp which is an emergency program”, said the president of the ECB. Christine Lagarde in the traditional press conference following the meeting. The economic recovery is “increasingly advanced and our expectations are for the pre-pandemic activity levels to be exceeded by the end of this year”, he explained adding that “the global spread of the Delta variant could slow down” the pace of the recovery. . The ECB has revised its growth forecasts for the current year upwards, with GDP expected to rise by 5%, from 4.6%. Upward correction also for inflation, expected at 2.2% in 2021 and at 1.7% the next (from 1.9% and 1.5%).
“In December we will face the moves for the post Pepp”
The ECB today “unanimously decided to recalibrate the pace” of the Pepp pandemic emergency program. “We have not discussed the ‘after’, so we will prepare in the months to come and I think there will be more interesting topics that we will discuss in December and on which you will be informed promptly”, clarified Lagarde.