European Central Bank announcement

  • €750 billion pandemic emergency purchase programme (PEPP)
  • a new temporary asset purchase programme of private and public sector securities to counter the serious risks to the monetary policy transmission mechanism
  • purchases will be conducted until the end of 2020 and will include all the asset categories eligible under the existing asset purchase programme
  • says for the purchases of public sector securities, the benchmark allocation across jurisdictions will continue to be the capital key of the national central banks.
  • says to the extent that some self-imposed limits might hamper action that the ECB is required to take in order to fulfil its mandate, the governing council will consider revising them to the extent necessary
  • says at the same time, purchases under the new PEPPwill be conducted in a flexible manner. this allows for fluctuations in the distribution of purchase flows over time, across asset classes and among jurisdictions.
  • says a waiver of the eligibility requirements for securities issued by the Greek government will be granted for purchases under PEPP.
  • says the governing council is fully prepared to increase the size of its asset purchase programmes and adjust their composition, by as much as necessary and for as longas needed
  • the governing council will terminate net asset purchases under PEPP once it judges that the coronavirus covid-19 crisis phase is over, but in any case not before the end of the year
  • says to expand the range of eligible assets under the corporate sector purchase programme (CSPP) to non-financial commercial paper, making all commercial papers of sufficient credit quality eligible for purchase under CSPP
  • says the governing council of the ECB is committed to playing its role in supporting all citizens of the euro area through this extremely challenging time

Summary Headlines via Reuters

ES futures have flipped around to positive on this supportive announcement after losing ground earlier on the reopening for evening trade.

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There are plenty of responses to these sorts of actions along the lines that they will not 'cure' the coronavirus. Correct. Central banks are applying band-aids to mitigate (hopefully) the impacts upon econiomies, doing what they can do. Don't expect Lagarde, Powell, et al find a miracle medical cure, K?