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No surprises came out of last Thursday's ECB meeting, with the expected announcement of a reduction in asset buybacks under its pandemic emergency purchase program (PEPP). The big decisions on monetary policy measures will have to wait until its meets on December 16.
Last week the ECB held its first meeting since announcing its Strategy review of monetary policy a few days ago, in which it faced the dual challenge of nailing down future strategy and taking decisions on existing policies.
June will be a key month for discovering how the two main central banks—the Federal Reserve (Fed) and the European Central Bank (ECB)—plan to begin to reverse the unprecedented expansionary policies launched at the start of the COVID-19 crisis.
The Asset Purchase Programme will end in December 2018. However, interest rates will remain on hold at least until the summer 2019, later than expected. Macro projections were revised in line with expectations: GDP down in 2018 to 2.1% and inflation up in 2018 and 2019 to 1.7%.
The ECB removed the easing bias on the Asset Purchase Programme. Macro projections remained mostly unchanged. Protectionism (re)emerges as a downside risk.