European Central Bank reduces stimulus

Note: This section contains information in English only.
Source: Dukascopy Bank SA
On December 16, the European Central Bank published its monetary policy decisions. The central bank kept its interest rates unchanged. However, the bank would reduce asset purchases of the pandemic emergency purchase programme.

Quoting the official release: "The Governing Council decided to extend the reinvestment horizon for the PEPP. It now intends to reinvest the principal payments from maturing securities purchased under the PEPP until at least the end of 2024.

In line with a step-by-step reduction in asset purchases and to ensure that the monetary policy stance remains consistent with inflation stabilising at its target over the medium term, the Governing Council decided on a monthly net purchase pace of €40 billion in the second quarter and €30 billion in the third quarter under the asset purchase programme (APP). From October 2022 onwards, the Governing Council will maintain net asset purchases under the APP at a monthly pace of €20 billion for as long as necessary to reinforce the accommodative impact of its policy rates. The Governing Council expects net purchases to end shortly before it starts raising the key ECB interest rates."

Released Document

Monetary policy decisions

On the release, the EUR/USD surged by 28 base points or 0.25% in six minutes.

On a larger scale, the pair remains in the previous December trading range.

Initial Reaction

Larger scale situation

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