Published on Tuesday, June 9, 2020

Europe | The ECB doubles down

Three months after approving a Pandemic Emergency Purchase Program (PEPP) for an initial EUR 750 billion in response to the COVID-19 crisis, at its most recent meeting, the European Central Bank (ECB) agreed to expand the program by a further EUR 600 billion.

Key points

  • Key points:
  • With this new amount—and with the official extension of the program until mid-2021—the ECB guarantees heavy duty intervention for another year, until the post-COVID-19 economic outlook is much clearer.
  • The new measure means that the central bank will remain very active in both the sovereign and the corporate bond markets.
  • In its forecasts, the ECB's new base scenario forecasts an 8.7% decline in GDP this year, with two alternative scenarios predicting falls of 5.9% and 12.6%.
  • The ECB also strongly supports the European Commission's recovery fund proposal.

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