The European Central Bank (ECB) kept unchanged its monetary policy to support the economy against the coronavirus on Thursday, on the eve of an EU summit dedicated to economic recovery.
Its support program for the economy concerns in particular its debt buybacks on the markets, aimed at limiting the effects of the health crisis and brought in June to 1350 billion euros. It is to run until June 2021. This measure aims to relieve banks, but also businesses and states facing the impact of the pandemic.
The ECB has also confirmed that it will reinvest the securities participating in the PEPP until their maturity until 2022, a measure to better manage this stock of assets over the long term, as it is already doing for its “QE” program. “of asset repurchases put in place in 2015. This program was confirmed at the rate of 20 billion euros per month, to which are added 120 billion euros which will be committed in 2020.
Unsurprisingly, the ECB’s main interest rate has been kept at zero, while banks will be charged 0.50% on a fraction of the deposits they entrust to the central bank instead of lending them to their customers.
ECB President Christine Lagarde will detail her analysis of the economic situation at the virtual press conference starting at 12:30 GMT. The institution said in June that it expects a fall in GDP in the euro area this year, of 8.7%, followed by a rise of 5.2% next year and 3.3% in 2022.
The ECB’s Governing Council met on the eve of an extraordinary summit in Brussels where the 27 EU countries will try to agree on a recovery plan for the heavy economy of 750 billion euros . A plan that has the potential to “change the game” in Europe, said Lagarde recently.
But its adoption could still take time because of the reluctance of the “frugal” countries of northern Europe, hostile to the idea of subsidizing the countries in need, which are mainly in the south.