Jan von Gerich, analyst at Nordea Markets, notes that the ECB announced an entire package of easing measures today that appear to have exceeded market expectations to some extent.
“The ECB announced a number of new easing measures today
- A 10bp cut in the deposit rate to -0.50%
- Restarting net asset purchases at a monthly volume of EUR 20bn from the beginning of November and continuing them as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates
- Strengthening forward guidance by saying rates are expected to remain at their present or lower levels until it has seen the 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.
- Moving to a two-tiered reserve system to support the bank-based transmission of monetary policy
- Easing the terms of the targeted longer-term refinancing operations (TLTROs) by lowering the minimum borrowing rate offered to as low as the deposit rate and extending the maturity from two to three years.”
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