Breaking: ECB leaves key rates and PEPP unchanged, EUR/USD holds around 1.1950


The European Central Bank (ECB) decided to leave the interest rates on the main refinancing operations, the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.50%, respectively, as expected.

Furthermore, the ECB noted that it will continue to conduct net asset purchases under Pandemic Emergency Purchase Programme (PEPP) with a total envelope of €1,850 billion until at least the end of March 2022.

Follow our live coverage of the ECB's policy announcements and the market reaction. 

Market reaction

With the initial market reaction, the EUR/USD pair edged slightly lower and was last seen trading at 1.1947, up 0.18% on a daily basis.

Key takeaways from policy statement as summarized by Reuters

"Based on a joint assessment of financing conditions and inflation outlook, ECB expects purchases under PEPP over next quarter to be conducted at a significantly higher pace than during the first months of this year."

"Flexibility of purchases over time, across asset classes and among jurisdictions will continue to support smooth transmission of monetary policy."

"If favourable financing conditions can be maintained with asset purchase flows that do not exhaust envelope over net purchase horizon of PEPP, envelope need not be used in full."

"Envelope can be recalibrated if required to maintain favourable financing conditions to help counter negative pandemic shock to the path of inflation."

"ECB will continue to reinvest principal payments from maturing securities purchased under PEPP until at least end of 2023."

"In any case, future roll-off of PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance."

"Net purchases will continue at a monthly pace of €20 billion."

"ECB continues to expect monthly net asset purchases under app to run for as long as necessary to reinforce accommodative impact of its policy rates, and to end shortly before it starts raising interest rates."

"ECB also intends to continue reinvesting, in full, principal payments from maturing securities purchased under the APP for an extended period of time past date when it starts raising interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation."

"ECB expects interest rates to remain at their present or lower levels until it has seen inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics."

"ECB will continue to provide ample liquidity through its refinancing operations."

"ECB stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry."

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