ECB WATCH | A package of measures to meet the second wave of Covid

Summary

The ECB action was broadly in line with what we were expecting (somewhat to the lower bound) announcing a package of further accommodative measures. Moreover, the central bank reaffirmed its readiness to adjust its instruments further if needed (as risks remain tilted to the downside).

Key points

• Key points:
• The central bank approves an expansion of the PEPP, TLTROs III and easing of collateral rules
• No changes in the APP program, the tiering system for deposit rates or key interest rates
• Growth is revised up in 2020 and down in 2021, in line with recent data and evolution of Covid. Uncertainty remains high, but downside risks are less pronounced
• Further recalibration of measures (different amount of PEPP or lower interest rates) are not ruled out

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