After holding interest rates, as predicted, the European Central Bank decided to expand its quantitative easing program further by 600 billion euros to stimulate the economy to overcome the negative impact of the coronavirus.
The bond purchases will continue until the end of June 2021, the ECB said in a statement. Analysts had predicted €500bn in quantitative easing stimulus.
Now, the total pandemic emergency purchase programme (PEPP) will total 1.35 trillion euros.
“The PEPP expansion will further ease the general monetary policy stance, supporting funding conditions in the real economy, especially for businesses and households,” the ECB statement said.
“The purchases will continue to be conducted in a flexible manner over time, across asset classes and among jurisdictions. This allows the governing council to effectively stave off risks to the smooth transmission of monetary policy.”
Purchases will continue at a monthly pace of 20 billion euros, plus another 120 billion euros spread out until the end of the year, where the balance sheet of assets bought will not shrink until the ECB starts to raise interest rates.
As of 12:11 GMT, the
euro reversed its earlier losses versus the U.S. dollar, extending its advance
for a ninth straight session to 1.1271, the highest since March 12.