ECB Leaves Rates Unchanged, APP will continue at a monthly pace of €20 billion

ECB left rates unchanged as expected in October. The bank left deposit facility interest rates at -.50% and held steady rates on the main refinancing operations and on the marginal lending facility unchanged. ECB again judges that favourable financing conditions can be maintained with a moderately lower pace of PEPP purchases

ECB left rates unchanged as expected in October. The bank left deposit facility interest rates at -.50% and held steady rates on the main refinancing operations and on the marginal lending facility unchanged. ECB again judges that favourable financing conditions can be maintained with a moderately lower pace of PEPP purchases

BankofECB

The European Central Bank announces its monetary policy decision for October 2021

Deposit facility rate -0.50% Main refinancing rate 0.00% Marginal lending facility 0.25%

Highlights

  • ECB reaffirms size of PEPP at €1.85 trillion
  • PEPP to continue through until at least end of March 2022
  • PEPP to continue to run at a significantly higher pace
  • ECB judges that favourable financing conditions can be maintained with a moderately lower pace of PEPP purchases
  • APP purchases to continue at a monthly pace of €20 billion
  • Expects APP purchases to continue for as long as necessary to reinforce accommodative impact of policy rates
  • ECB will continue to conduct PEPP purchases in a total envelope of €1,850 billion until at least March 2022
  • Confirms “moderately lower pace” of net PEPP purchases
  • Expects the key rates to remain at their present or lower levels until it sees inflation reaching 2% well ahead of the end of its projection horizon and durably for the rest of the projection horizon

NB LTRO (Targeted Longer-Term Refinancing Operations) is best described as a long term loan to banks to increase loan creation. The banks lend above a specified benchmark and borrow from the ECB at a negative rate. This will provide an incentive for the banks to lend and thus increase private spending in the economy. That’s the theory clearly has not been a great success so far.

Full statement by the ECB: October 28 2021

 

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.

Webcast – 14:30 CET

Alternate player (audio: en,fr,de) Watch on Twitter @ECB

Live. https://www.ecb.europa.eu/home/html/index.en.html

Source: Euopean Central Bank

From The TradersCommunity Research Desk

One thought on “ECB Leaves Rates Unchanged, APP will continue at a monthly pace of €20 billion”

  1. TradersCom says:

    ECB balance sheet hit fresh ATH at €8,404.8bn
    Total assets rose by another €22.1bn in past week.
    ECB Balance Sheet now equal to 80.7% of EU GDP vs Fed’s 37.4%, BoE’s 41%, BoJ’s 134%.

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