ECB Watch | ECB holds fire, signals more stimulus in December

Summary

Against this background, we expect now the ECB to announce a bold package by December, which would include another PEPP expansion, recalibration of liquidity provisions, and modification to the tiering system

Key points

• Key points:
• The ECB kept all its main policy settings unchanged, in line with expectations
• It also conveyed a clear readiness to recalibrate all its policy instruments in December, or even inter-meeting, as warranted by a readjusted economic scenario
• There are clear downside risks for Q4 due to increase in virus contagions and consequent confinement measures
• On price stability, the ECB does not foresee deflation risks

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