The European Central Bank has confirmed its loose monetary policy

As expected, the European Central Bank (ECB) has not significantly changed its accommodative monetary policy stance. As expected, the Governing Council kept the key rate at 0.00%, the rate on overnight refinancing operations at 0.25% and the rate on overnight sterilization operations, the so-called deposit rate at -0.50%. The ECB has also confirmed that it will continue, at least until the end of March 2022, to continue the emergency pandemic program for the purchase of PEPP assets, with a total framework of EUR 1.85 trillion. As current information confirms the March assessment of financing conditions and inflation prospects, the Governing Council anticipates that purchases under the PEPP will be made at a significantly higher pace in the current quarter than in the first months of this year. The aim of the PEPP is to maintain favorable funding conditions for the duration of the pandemic. The Governing Council stated that it would adjust purchases to the market situation in order to avoid tightening funding conditions, which would run counter to the ECB's efforts to counter the dampening effects of the pandemic on inflation. The ECB will also continue its Asset Purchase Program (APP) at € 20 billion per month. The Governing Council expects net purchases under the APP to continue for as long as necessary to amplify the stimulus effect of base rate settings. The program will end just before the ECB starts raising its key rates. The Governing Council also intends to continue to reinvest the full principal repayments on the bonds acquired under the asset purchase program for an even longer period after it starts raising interest rates, and in any case for as long as necessary to maintain favorable liquidity conditions, and high degree of monetary accommodation. The ECB will also continue to provide sufficient liquidity through refinancing operations. The last operation within the third series of targeted longer-term refinancing operations (TLTRO III) recorded a high volume of funds drawn. According to the Governing Council, TLTRO III funding has a crucial role to play in supporting bank lending to businesses and households.