ECB’s stimulus package: Lagarde’s “Whatever it Takes” moment – UOB

Economist at UOB Group Lee Sue Ann assessed the recent announcements by the ECB.

Key Quotes

“In an unexpected move, unveiled late on Wednesday (18 March), the European Central Bank (ECB) announced a new EUR750bn bond-buying programme, called the Pandemic Emergency Purchase Programme (PEPP).”

“In a nutshell, this programme will last until the end of 2020, and will target both publicand private-sector assets.”

“In the press release, the Governing Council of the ECB stated that it was committed to playing its role in supporting all citizens of the euro area through this extremely challenging time and would ensure that all sectors of the economy can benefit from supportive financing conditions that enable them to absorb this shock.”

“Just slightly less than a week ago on 12 March, the ECB had disappointed markets by keeping its three key interest rates unchanged; but pledged instead to re-open its dormant quantitative easing (QE) programme to support the economy as it grapples with the COVID-19 pandemic.”

“In all, we think the ECB has made a fairly aggressive move here… Whilst we think that these monetary policy measures will be better complemented with even more fiscal measures; this is, for now, definitely Lagarde’s “whatever it takes” moment.”