ECB Governing Council 29/10/2020
ECB Governing Council 29th October 2020
No new initiatives from ECB as Eurozone economy slows
Prices fell by 0.3% in the year to September across the 19-member bloc, which is a worry several members of the MPC. Given the high money growth, any deflation is likely to end rapidly once the worst of the pandemic is over and the economy reopens. The latest broad money figures for the Eurozone saw the annualised rate of broad money growth rise to 8.7% in the three months to September. Broad Money grew by €156b. during the month, a significant rise on August’s figure of €24b. This pushed up the annual growth rate to 10.4%., the highest figure since April 2008. Even if no fiscal or monetary initiatives are announced, the asset purchase programmes already in place should ensure that M3 growth remains at an elevated level for the rest of the year, if not longer
No new initiatives from the ECB as Eurozone economy slows The European Central Bank’s Monetary Policy Committee met on 29th October on the day before France, the second largest member of the Eurozone, began a new month-long lockdown and Germany tightened up restrictions as a result of a rise in the number of coronavirus infections. Although these moves will slow economic growth, no new initiatives were announced. The main refinancing rate was left unchanged at 0% while the deposit rate remained at a record low of -0.5%. Asset purchases under the recently-launched €1,350b. Pandemic Emergency Purchase Programme (PEPP) will continue until at least June 2021. The MPC stated that ether would be no run-off of assets until at least the end of 2022. The asset purchase programme launched in late 2019, before the pandemic, will continue at its current rate of €20b, along with further purchases under an additional scheme worth €120b. in total. These assets too will be reinvested until the ECB feels ready to raise interest rates.
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