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ECB Review: December 2020

The ECB's December easing package broadly matched expectations heading into the meeting. The PEPP programme was expanded by EUR500bn and extended until March 2022 (longer than most expected and reflecting the ECB's new focus on stimulus duration rather than size) with reinvestments running until at least end-2023. Three additional TLTRO tranches will be added with the period in which the most favourable lending rate applies extended until June 2022. There will be four additional PELTROs and the APP will continue to run at EUR20bn/month. Revised staff macroeconomic forecasts show a slightly better than expected GDP forecast for 2020 alongside a weaker 2021 projection and a stronger outturn for 2022. The most significant forecast, however, is the new 2023 inflation projection (1.4% Y/Y) which shows CPI continuing to run below the price stability objective and leaves the door open for further policy easing going forward.


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ECB Review Dec 2020.pdf

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