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ECB is steady in its policy approach

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Miguel A. Rodriguez
Miguel A. Rodriguez
14 settembre 2020
The European Central Bank: the interest rates will be unchanged

The long-awaited European Central Bank meeting came and left the markets in a state of awe.

At the press conference, the ECB announced that it would keep its interest rates unchanged. The refinancing operations rate will remain at 0.0%, while the marginal lending facility and the deposit facility will be steady at 0.25% and -0.50%. At the same time, the Pandemic Emergency Purchase Programme (PEPP) also remains as it is at $1.6 trillion. Although the Bank is against significant policy action, the ECB President Christine Lagarde stated that "Certainly under current circumstances, it is very likely that the full envelope of PEPP will be used."

The decisions came unexpectedly, given the fact that for August, inflation had the lowest reading in almost two decades.

Moreover, the ECB revised its GDP forecast for 2020, after an economic rebound in the Eurozone has been reported, “the incoming data since our last monetary policy meeting in July suggest a strong rebound in activity broadly in line with previous expectations." It is expected to reach 8% from a previous estimate of 8.7%. For 2021 and 2022, the Bank is looking for a 5% growth and 3.2%, respectively.

Despite Lagarde’s statement, analysts are expecting an increase of PEPP by the end of the year. 

During the press conference, the EUR/USD reached one-week high trading at $1.1902. 

Read how markets performed after the meeting here!

Sources: theguardian.com, cnbc.com


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Miguel A. Rodriguez
Miguel A. Rodriguez
financial_writer

Miguel ha lavorato per importanti istituzioni finanziarie, come Banco Santander e Banco Central-Hispano. È autore di libri sul trading di valuta con diverse pubblicazioni alle spalle.