The European Central Bank (ECB) has ruled in line with market expectations that the loose policy announced will not change on Thursday. However, the ECB did not rule out the possibility that there would be more stimulus packages as the economic prospects of the European Union (EU) became increasingly worrying, in addition to the worsening Covid-19 outbreak.
Last December the ECB announced a large stimulus package by increasing the total emergency bond purchase program from 500 billion euros ($ 605.40 million) to 1.85 trillion euros and the program period was extended for 9 months until March 2022. The aim was to ensure borrowing costs government and corporate at the lowest level.
On that basis it can be concluded that the ECB has provided almost all possible assistance to enable banks to make their own bond purchases.
Analysts are of the view that so far no further changes in policy are expected. However, the ‘lockdown’ measures imposed and the delay in the distribution of the Covid-19 vaccine could curb economic growth and increase the risk that more stimulus would be imposed earlier than expected.
The ECB also stated that the Governing Council is preparing to adapt existing instruments to ensure inflation reaches its targets. The ECB's decision today is essentially the ECB to maintain the Emergency Bond Purchase Quota (PEPP) at 1.85 trillion euros and expects the purchase to last at least until March 2022.
The Bank also maintains a negative deposit rate of 0.5% and will continue to provide long-term loans to banks at a negative rate of 1%.
The Euro strengthened 0.35% to the exchange rate of 1.2146 against the US dollar at 10.35 p.m.
