ECB slightly decreases stimulus

Source: Dukascopy Bank SA
On September 9, the European Central Bank published its Monetary Policy Statement and Main Refinancing Rate. In general, the central bank kept its policy intact. Namely, monetary stimulus is bound to remain intact until the ECB reaches its 2% inflation target. However, the bank revealed that it would moderately lower the pace of asset purchases. This minor aspect boosted the value of the Euro.

Quoting the statement: "Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council judges that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases under the pandemic emergency purchase programme (PEPP) than in the previous two quarters.

The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively. Net purchases under the APP will continue at a monthly pace of €20 billion.

The Governing Council continues to expect monthly net asset purchases under the APP to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates.

The Governing Council will continue to conduct net asset purchases under the PEPP with a total envelope of €1,850 billion until at least the end of March 2022 and, in any case, until it judges that the coronavirus crisis phase is over."

Monetary Policy Statement

Monetary policy decisions

On the announcement, the EUR/USD slightly dipped before recovering a total of 17 base points or 0.14%.

On a larger scale, the event extended a recovery of the EUR against the US Dollar, which had started at midnight to September 9.

Initial Reaction

Larger scale situation

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Actual Topics

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