ECB delivers bold measures but sees the ball primarily in the field of fiscal policy

Today the ECB delivered a comprehensive policy package consisting of additional LTROs, TLTRO III targeting SMEs, a temporary increase of QE by cumulatively € 120 bn skewed towards CSPP until year-end and some regulatory easing for banks. It refrained from cutting the deposit rate.
  • Market Commentary

Highlights:

  • Today the ECB delivered a comprehensive policy package consisting of additional LTROs,
    TLTRO III targeting SMEs, a temporary increase of QE by cumulatively € 120 bn skewed
    towards CSPP until year-end and some regulatory easing for banks. It refrained from cutting
    the deposit rate.
  • The Covid-19 shock is seen as temporary and monetary policy makers look for a V-shaped
    development, while seeing the risks clearly tilted to the downside.
  • The Governing Council, however, sees the ball for supporting measures in the field of
    governments and urged for “ambitious and coordinated fiscal policy response”.
  • Looking ahead, only in case of a longer lasting crisis the ECB would probably think about
    additional policy measures.

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ECB DELIVERS BOLD MEASURES BUT SEES THE BALL PRIMARILY IN THE FIELD OF FISCAL POLICY
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