The ECB expanded the stimulus package and prolonged the TLTRO-III program for one more year

On Thursday, the European Central Bank left its deposit rate unchanged at -0.05%. And also issued an important statement on the next additional stimulating measures of the economy. Along with the expected increase in the volume of fixed-term bonds in the amount of €500 billion to €1.85 trillion, the following terms of the programs were changed:

  • The TLTRO-III loan program will be extended for another 12 months until June 2020 and will be supplemented with new offers during the next 2021;
  • Four additional long-term emergency refinancing programs (PELTRO) will be proposed in 2021 to ensure high liquidity.

The announcement regarding the old bond-buying program remains unchanged – the monthly rate of €20 billion will remain unchanged and will end shortly before the rate hike.

A year after taking office as the head of the ECB, Christine Lagarde made a significant "recalibration" of the system. In fact, it is not monetary incentives that are expanding now, but monetary regulation.

The market reacted relatively calmly, as the monetary regulator didn’t spring a surprise:
  • German 10-year bonds remained unchanged at 0.590%;
  • DAX lost 0.77% to 13,237.15;
  • The euro is trading with an increase to 0.25% against the dollar around 1.2105.

Justforex, 10.12.2020

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

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