- At today’s meeting the ECB Governing Council decided to extend the PEPP to at least June 2021 and to increase its volume by € 600 bn to a total of € 1350 bn: related reinvestments will take place at least until the end of 2022 to avoid premature balance sheet contraction.
- The rationale for action is the need to bring inflation back to the pre-Covid-19 path amid sharply downward revised macro projections (2020/21: -8.7% / 5.2%) and still prevailing downside risks.
- In the Q&A session President Lagarde was pleased by the Recovery Fund proposal. Alongside with further stimulus programs (as the German one announced yesterday) it will support the conditions for a recovery in her view.
- The ECB maintained its easing bias but unless downside risks materialize further bold ECB actions do not seem imminent.