The ECB Adds €600 Billion to the PEPP Programme

Posted Thursday, June 4, 2020 by
Skerdian Meta • 1 min read

The European Central Bank held its meeting a while ago, releasing the statement as well. Markets were expecting more action from the ECB and they increased the PEPP programme by €600 billion. They will keep interest rates at these levels or even cut them lower as long as it takes for inflation to increase, but that will take some time. Below is their statement:

  • Deposit facility rate -0.50%
  • Main refinancing rate 0.00%
  • Marginal lending facility 0.25%
  • Adds €600 billion to PEPP, extends program to at least June 2021
  • Says that it will conduct PEPP purchases in a flexible manner
  • Says that rates will stay at present or lower levels until it nears inflation target
  • Reaffirms that it stands ready to adjust all instruments as appropriate
  • Expects QE to run for as long as necessary to reinforce accommodative rates impact

The forward guidance pretty much reads the same but the ECB certainly delivered on expectations with regards to PEPP.

In essence, this shows that they are committed to keep the economic recovery going as they boost the program by €600 billion (expectation was €500 billion) and extend it to the middle of next year. The ECB did not go as far to include junk bonds in the program though.

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