ECB Keeps Policy Unchanged, Renews Pledge For Faster Bond Buying

As previewed this morning, after lots of noise, the ECB ended up keeping its key policy unchanged and continues to see PEPP purchases "to continue at significantly higher pace" for at least the current quarter, meaning that the ECB's Dovish policies remain in place for summer with bond-buying to continue at a "significantly higher" pace in 3Q and ahead of the Sep strategy review.

The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25%, and -0.50% respectively. The Governing Council will continue to conduct net asset purchases under the pandemic emergency purchase program with a total envelope of EU1.85t until at least the end of March 2022.

The key sentence: “Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council expects net purchases under the PEPP over the coming quarter to continue to be conducted at a significantly higher pace than during the first months of the year,” the European Central Bank says in a statement. The word "coming" is the only change to the April statement, replacing "current."

Additionally, bond-buying under the older APP program will continue at a monthly pace of EU20b for as long as necessary

Next up: ECB President Christine Lagarde speaks at 2:30 p.m. in Frankfurt when ECB watchers should expect a cautious message and emphasis on avoiding a tightening of financial conditions at a presser. Inflation forecasts may be notable.

As a reminder for those curious how to trade today's announcement, ING summarized it best:

Here is the full statement from today's meeting

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