Below we present some key bullet points regarding today’s ECB’s meeting. Measures are supposed to revive the economy amid coronavirus outbreak, which according to ECB’s President Lagarde will have a tremendous impact on demand slowdown and negative consequences for European output.
-
Additional new LTRO, which should guarantee immediate liquidity injection in the eurozone. So far the ECB does not see any liquidity problems, yet the above programme should counter any possible liquidity shortages in the banking sector. LTRO would provide additional liquidity with 36-month loans until TLTRO III launches in June 2020
-
TLTRO III will introduce more favourable terms. From June 2020 to June 2021 the rate will be 25bps below the MRO rate
-
Temporary QE extentionsion of €120 bln monthly (until the end of the year), with purchases particularly in private sector
-
QE programme will be continued as long as needed
-
Interest rates remain unchanged. They will remain low until inflations boosts (inflation target of 2%)
Apart from that, the ECB will introduce measures that will loosen capital requirements for banks - they can fully use capital and liquidity buffers, including Pillar 2 Guidance. Banks will also be allowed to partially use capital instruments that do not qualify as Common Equity Tier 1 (CET1) capital, for example Additional Tier 1 or Tier 2 instruments, to meet the Pillar 2 Requirements (P2R).
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appWhat did Lagarde mention?
-
Lagarde encouraged to implement some coordinated measures by fiscal authorities
-
ECB’s efforts are to ensure that the credit sector remains liquid
-
ECB projected an annual growth of 0.8% this year compared with 1.1% in the previous forecast
-
The risk of further economic slowdown
-
The economic growth of 1.3% in 2021 (previous forecast: 1.4%). Obviously macroeconomic expectations do not have much in common with today’s reality.
EURUSD continues to plunge following the ECB's decision. On the other hand, DAX is dropping almost 10%. Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.