MNI BRIEF: PEPP, TLTRO Traction Proven In Pandemic: ECB Mersch

Recalibration of monetary policy tools has many possibilities including extension of size, duration or intensity, and the Governing Council will decide what is the most efficient, European Central Bank Executive Board member Yves Mersch told the FT in an interview published the the Bank's website. Mersch said the central bank had the full panoply of instruments available to it, but accepted that PEPP and TLTRO had had 'a good amount of traction' in the current circumstances.

On whether or not to further deepen the deposit rate further into negative territory, Mersch said the instrument 'is still there'. However, he accepted the ECB had 'little knowledge' about when the reversal rate could kick in, and it could be tricky to test as it could be different from one country to another.