The European Central Bank on Thursday held the monetary policy steady, but tweaked its guidance to reflect its recently-hiked inflation target.
- The ECB has committed to purchasing $2.2 trillion of bonds until March 2022 as part of its Pandemic Emergency Purchase Program (PEPP) and policymakers passed resolutions to maintain stimulus on the table at the moment.
- The interest rates remained unchanged, with the rate on the main deposit facility remaining at -0.5%, the benchmark refinancing at 0%, and marginal lending facility at 0.25%.
- The ECB’s Governing Council revised its forward guidance on interest rates, having improved its inflation target to a symmetric 2% over the medium term.
- The Governing Council will continue to reinvest the principal payments from maturing securities purchased under the PEPP until at least the close of 2023.
The Council will continue to provide ample liquidity through its refinancing operations. The third series of targeted longer-term refinancing operations (TLTRO III) still remains an attractive source of funding banks.
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