European Union promises increased stimulus package

The European Central Bank committed on Thursday to take new action in December to contain the growing fallout from a second wave of coronavirus infections, likely in the form of more bond purchases or cheap credit for banks.

While the bank’s Governing Council left policy unchanged this time around, it was the clearest hint yet of more stimulus to come as new national lockdown measures make a double-dip recession increasingly likely for the euro zone economy.

“We agreed, all of us, that it was necessary to take action and therefore to recalibrate our instruments at our next Governing Council meeting,” ECB President Christine Lagarde told a news conference.

Sources told Reuters some policymakers at Thursday’s meeting favoured expanding the ECB’s Pandemic Emergency Purchase Programme (PEPP) while others put greater emphasis on even more generous credit for banks under its Targeted Longer-Term Refinancing Operations (TLTRO), or on a mix of both.

One of the open questions related to the size and composition of PEPP, which has exhausted nearly half of its 1.35 trillion euro ($1.60 trillion) firepower, and how to make it targeted to the current juncture, one of the sources said.


Source: Reuters