LAGARDE: 500 BILLION MORE FOR QE, BUT “WE COULD NOT SPEND IT”
The ECB announced that to halt the impressive decline in euro area GDP it will expand its PEPP (pandemic emergency purchase program) by € 500 billion (as planned), extend the duration of the PEPP until March 2022 ( it was expected to end in 2021); and further recalibrates TLTRO by adding three more operations in 2021 and extending it by 12 months. therefore in total the PEPP reaches 1850 billion euros, exceeding the Italian GDP for this year, and abundantly.
Other measures:
- unchanged interests;
- the “Relaxed” regulations on collateral extended to June 2022;
- the 2022 TLTRO operations will be part of the special PELTRO operations, i.e. repayment times and more relaxed times will follow.
Lagarde's comment is interesting in communicating that it is NOT said that the ECB will decide to fully use the PEPP, as if it could leave a part of it unused in advance. Maybe a push for France, Portugal and Spain to use the debt part of the RRF. The effects are seen immediately on the yield of the BTP
A bad sentence and the BTP yield goes up by almost 50bps. Now you understand why they want immunity and irresponsibility: a normal person would be under investigation to evaluate any inside trading links.
For now the markets seem disappointed (the euro is always above 1.2 against the US dollar). Christine Lagarde complained that inflation is "disappointingly low" in the Eurozone. Isn't it his fault and some "austere country?"
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The LAGARDE article : 500 BILLION MORE FOR QE, BUT “WE MAY NOT SPEND IT” comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/lagarde-500-miliardi-in-piu-per-il-qe-ma-potremmo-non-spenderli/ on Thu, 10 Dec 2020 18:23:19 +0000.