ECB meeting: now, fiscal policy has to play its part

Friday 13 March 2020

Research / Market

At its meeting on 12 March, the ECB disappointed market expectations by not cutting rates in the wake of the coronavirus spread. The bank delivered additional unconventional monetary easing thorough a temporary boost to its QE programme, which will see a set of additional net asset purchases worth EUR 120Bn this year. Such purchases will be mainly skewed towards the private sector. In addition, the ECB will temporarily be conducting additional LTROs to provide immediate support to the Eurozone financial system while the ECB’s banking supervision will provide temporary capital and operational relief in reaction to the coronavirus outbreak.

Finally, the ECB supports the EBA decision to postpone the 2020 stress test so that banks can focus on business. Importantly, Ms Lagarde made a strongly worded request for “ambitious and coordinated fiscal policy”, as the response to the coronavirus-induced crisis should be fiscal first and foremost...

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