Remarks by ECB executive board member, Isabel Schnabel

  • ECB may consider longer duration of favourable TLTRO rate
  • ECB isn't obliged to do what markets expect from us
  • ECB stimulus should sustain, not ease financial stance
  • Euro area Q4 economic contraction is very likely
  • Stimulus must reflect more protracted pandemic crisis

In other words, she is trying to communicate the message that the need to "recalibrate" in December is largely due to the pandemic crisis being worse than anticipated. As such, they should stick with what worked in March to reflect that.

As mentioned before, that just means the two main tools they will be working with next month will be the expansion/extension of PEPP and enhancing TLTROs as suggested.

Another 12-month extension of PEPP will take it until June 2022. "Temporary".