The European (ECB) held its interest rates unchanged during their meeting yesterday.
- Main Refinancing Operations Rate: 0.00%
- Marginal Lending Facility Rate: 0.25%
- Deposit Facility Rate: -0.50%
- Asset Purchase Programme (APP): €20 billion per month
- Pandemic Emergency Purchase Programme (PEPP): €1,850 billion in total
On top of that, the has opted for a reduction of pace in its assets purchase under the PEPP but did not provide more details on the amount. At the moment, €80 billion worth of assets are being purchased on a monthly basis.
It’s recalibration, not tapering.
Just when the market is trying to figure out from the statement if the ECB has just carried out a tapering, the central bank’s President Christine Lagarde elucidated that the reduction of the pace is not a tapering, but a recalibration. The ECB’s decision “is to calibrate the pace of our purchases in order to deliver on our goal of favourable financing conditions”.
President Lagarde’s comment left the market wondering how significant is such an action carried out by the going to have on if it is not considered as tapering. As a result, the euro was moving in an unclear direction.
Although the ECB’s action is likely going to spark some discussions over its ambiguity, one thing we know for sure is that the is feeling confident in the recent rise in in the eurozone. As released in the quarterly projection materials, overall forecasts have been revised upwards.