ECB leaves key rates unchanged in April monetary policy meeting, as expected

ECB announces their latest monetary policy decision – 22 April 2021

  • Prior decision
  • Deposit facility rate -0.50%
  • Main refinancing rate 0.00%
  • Marginal lending facility 0.25%
  • PEPP purchases over the current quarter to continue to be significantly higher
  • Reaffirms size of PEPP program at €1.85 trillion
  • PEPP purchases to be conducted flexibly according to market conditions
  • QE purchases will continue at monthly pace of €20 billion
  • ECB stands ready to adjust all of its instruments, as appropriate
  • Full statement
They are reaffirming their pledge of higher PEPP purchases until June but so far it hasn’t really been showing up in the data, at least not “significantly”. Other than that, the rest of the policy language appears to be unchanged. The ECB still retains the key passage:

The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.

Pretty much a non-event as they continue to maintain that PEPP is flexible with regards to timing and size, in that they don’t have to use the full envelope or can increase it.
Over to Lagarde next but barring any communication mishap, there shouldn’t be much for euro traders to chew on. As such, the technicals are still the key thing to watch.
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