European Central Bank President Christine Lagarde has just announced the main points of monetary policy in the eurozone for the next period. As expected, the ECB turned on the machines following the US Federal Reserve in order to support the euro. In addition, it plans to increase the volume of purchases of government bonds. These measures are aimed at keeping borrowing costs low.
At the same time, the ECB has almost a billion euros stashed away to buy bonds and reduce interest rates on loans.
The Covid-19 pandemic program package remained unchanged, despite the obvious lack of measures in this direction. This news does not look particularly rosy in light of the recall of the AstraZeneca vaccine.
By and large, analysts did not expect a global policy reversal, as the ECB is under pressure from public opinion, which suspects the central bank of manipulating the market in order to protect the government.
Lagarde said: “Although our forecasts predict an increase in the pressure of inflation, its medium-term forecast remains unchanged from December 2020… Despite the expectation of an improvement in the overall economic situation during 2021, there remains uncertainty about the short-term economic performance.., including due to the speed of vaccination.”
The ECB has maintained the main quotas for the purchase of bonds in the event of a further increase in rates worth 1.85 trillion euros. This news itself is able to keep rates from rising further.
On deposits, the rate remained at -0.5% with a reserve for further possible reduction. Interbank loans also remained the same at 1%.
Well, it seems that the ECB meeting was a passing one, to which the EURUSD rate reacted immediately. In fact, the ECB transferred control to the Federal Reserve. Now everything depends on the dollar and the auction of 30-year bonds.
The material has been provided by InstaForex Company – www.instaforex.com
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