TEXT-Statement from the ECB following policy meeting By Reuters

© Reuters. FILE PHOTO: The skyline with the banking district and the headquarters of the European Central Bank (ECB) are photographed in Frankfurt, Germany, October 4, 2021. REUTERS/Kai Pfaffenbach

FRANKFURT, Dec 16 (Reuters) – Following is the assertion from the European Central Bank following its policy meeting.

The Governing Council judges that the progress on financial restoration and in direction of its medium-term inflation goal permits a step-by-step discount in the tempo of its asset purchases over the coming quarters.

But financial lodging continues to be wanted for inflation to stabilise at the 2% inflation goal over the medium time period.


In view of the present uncertainty, the Governing Council wants to keep up flexibility and optionality in the conduct of financial policy.

With that is thoughts, the Governing Council took the following selections: Pandemic emergency buy programme (PEPP) In the first quarter of 2022, the Governing Council expects to conduct web asset purchases beneath the pandemic emergency buy programme (PEPP) at a decrease tempo than in the earlier quarter.

It will discontinue web asset purchases beneath the PEPP at the finish of March 2022.

The Governing Council determined to increase the reinvestment horizon for the PEPP.


It now intends to reinvest the principal funds from maturing securities bought beneath the PEPP till at the least the finish of 2024.

In any case, the future roll-off of the PEPP portfolio will likely be managed to keep away from interference with the acceptable financial policy stance.

The pandemic has proven that, beneath pressured situations, flexibility in the design and conduct of asset purchases has helped to counter the impaired transmission of financial policy and made efforts to realize the Governing Council’s aim simpler.

Within our mandate, beneath pressured situations, flexibility will stay a component of financial policy every time threats to financial policy transmission jeopardise the attainment of value stability.


In explicit, in the occasion of renewed market fragmentation associated to the pandemic, PEPP reinvestments could be adjusted flexibly throughout time, asset courses and jurisdictions at any time.

This may embrace buying bonds issued by the Hellenic Republic over and above rollovers of redemptions in an effort to keep away from an interruption of purchases in that jurisdiction, which may impair the transmission of financial policy to the Greek financial system whereas it’s nonetheless recovering from the fallout of the pandemic.

Net purchases beneath the PEPP is also resumed, if obligatory, to counter destructive shocks associated to the pandemic.

Asset buy programme (APP) In line with a step-by-step discount in asset purchases and to make sure that the financial policy stance stays per inflation stabilising at its goal over the medium time period, the Governing Council selected a month-to-month web buy tempo of €40 billion in the second quarter and €30 billion in the third quarter beneath the asset buy programme (APP).

From October 2022 onwards, the Governing Council will preserve web asset purchases beneath the APP at a month-to-month tempo of €20 billion for so long as obligatory to strengthen the accommodative influence of its policy charges.

The Governing Council expects web purchases to finish shortly earlier than it begins elevating the key ECB rates of interest.

The Governing Council additionally intends to proceed reinvesting, in full, the principal funds from maturing securities bought beneath the APP for an prolonged time period previous the date when it begins elevating the key ECB rates of interest and, in any case, for so long as obligatory to keep up beneficial liquidity situations and an ample diploma of financial lodging.

Key ECB rates of interest The rate of interest on the principal refinancing operations and the rates of interest on the marginal lending facility and the deposit facility will stay unchanged at 0.00%, 0.25% and -0.50% respectively.

In assist of its symmetric 2% inflation goal and consistent with its financial policy technique, the Governing Council expects the key ECB rates of interest to stay at their current or decrease ranges till it sees inflation reaching 2% nicely forward of the finish of its projection horizon and durably for the remainder of the projection horizon, and it judges that realised progress in underlying inflation is sufficiently superior to be per inflation stabilising at 2% over the medium time period.

This might also suggest a transitory interval through which inflation is reasonably above goal.

Refinancing operations The Governing Council will proceed to watch financial institution funding situations and be sure that the maturing of TLTRO III operations doesn’t hamper the clean transmission of its financial policy.

The Governing Council will even recurrently assess how focused lending operations are contributing to its financial policy stance.

As introduced, it expects the particular situations relevant beneath TLTRO III to finish in June subsequent 12 months.

The Governing Council will even assess the acceptable calibration of its two-tier system for reserve remuneration in order that the destructive rate of interest policy doesn’t restrict banks’ intermediation capability in an setting of ample extra liquidity.

*** The Governing Council stands prepared to regulate all of its devices, as acceptable and in both path, to make sure that inflation stabilises at its 2% goal over the medium time period.

The President of the ECB will touch upon the concerns underlying these selections at a press convention beginning at 14:30 CET right now.

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