The ECB left rates and the asset purchase program unchanged. Risks to the economy are assessed to the downside

On Thursday, the European Central Bank left its deposit rate unchanged at the level of -0.50%. The asset purchase program remains unchanged:
  • The capacity of the shopping program during the pandemic remains at the level of €1.85 trillion and will last until the end of March 2022. The older shopping program remains at the same level of €20 billion per month.
  • Banks can receive long-term loans at a rate of -1% until mid-2022.
  • Collateral rules have been modified to make it easier for banks to access the ECB liquidity.

At a press conference, European Central Bank President Christine Lagarde said that the eurozone economy likely contracted at the end of last year, which means that the European bloc is now heading towards a double recession.

According to her, "The risks associated with the growth prospects of the Eurozone continue to have a downward trend, but are less signified." Also, "The introduction of vaccines, which began at the end of December, provides confidence in resolving the health crisis."

Economists are increasingly forecasting a cut in production in the first quarter of 2021 as the government raises social restrictions. And although Lagarde said that the risks to the economy are directed to the downside, there were no hints of an increase in monetary policy stimulus.

At the same time, there was a phrase: "the program of emergency purchase of bonds doesn’t have to be used to the full if it’s possible to keep the financing conditions at the current level without it." The market perceived this as the existing probability of the ECB's early withdrawal from the emergency stimulus program. At the moment, the euro rose to 1.2170. But most of the surveyed economists are still inclined to believe that the monetary regulator will spend the entire planned amount of €1.85 trillion, but the program won’t be extended.

Germany's 10-year debt securities (Bonds) rose to 0.487%. The DAX lost 0.25%.

by Justforex, 2021.01.21

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.

Open Account

Get Free Analytics

* required fields
Last Articles
All Articles
How to Interpret Inflation Data?
The Consumer Price Index, better known as CPI, is an important economic indicator regularly published by major economies to provide timely information on current inflation.
Read more
Setting the Clock Right: The Best Time To Trade Forex In India And Other Tips
In the forex market, many components come together for ensuring smooth operations and positive outcomes for a trader. Careful timing of trades is one of such components. In this article, we will explain how market timing is made, what time is best (and relatively worse) for trading, and how to choose the best time for forex trading in India.
Read more
The Matter of Trends: The Most Trending Forex Pairs
The forex market is lucrative for beginners and experienced traders alike because of high liquidity, various trading options, and earning potential that can be successfully realized with a properly chosen forex pair. Then the first question a trader should ask themselves is what pairs to trade and how to predict trends to make a profit off them. In this article, we will explore the trending potential of forex pairs, how to select the best pairs in forex, and uncover short-term and long-term trends.
Read more