Lagarde reportedly brokered a difficult compromise to push forward with the "recalibration" package
Reuters is reporting that the ECB had a tough time reaching a consensus over its "recalibration" tools yesterday, with the proposal put forth by Philip Lane said to have met with dissent on the size of bond purchases and the TLTRO terms.
It reached a point where Lagarde had to intervene to orchestrate an agreement on both points, offering concessions rather than sidelining those that disagreed.
One of those is the emphasis that the additional €500 billion PEPP envelope would not need to be spent in full if financing conditions remained easy.
Lagarde then also had to offer a compromise on the increase in the maximum amount banks will be entitled to borrow from their eligible loans, suggesting a figure of 55% instead of the increase from 50% to 60%.
This isn't quite so much good news for the euro if it starts to signal more of a divide between ECB policymakers as the hawks are growing more vocal.
It also means that the €500 billion additional in PEPP stimulus is seen as more of a ceiling rather than an extra buffer, so that is about as far as they can push it.
For now, what is done is done but just be mindful of the situation in case it has the potential to affect future ECB policy decisions if there is a change to the market landscape.
