ECB in a wait and see stance

Summary

As expected, at today’s monetary policy meeting the ECB left the key policy rate unchanged at 0.05%, did not take additional steps on non-standard measures but revealed operational details of the asset-backed securities (ABSPP) and covered bonds purchase programmes (CBPP). Mr. Draghi reiterated the unanimity within the Governing Council (GC) in their willingness to use further unconventional monetary policy if needed. Moreover, he took the opportunity to highlight that the new measures will enhance the transmission of the monetary policy and also, they should ease the monetary policy stance more broadly. Once again, he emphasised that these purchases (linked to TLTROs) will have a sizeable impact on the ECB´s balance sheet. On the economic outlook, as highlighted in the September statement, the GC continues to closely monitor risks on inflation over the medium term, while risks to the economic outlook continue to the downside.

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