MNI: ECB Leaves Key Rates, Policy Unchanged: Text

     LONDON (MNI) - Below is the text released by the European Central Bank's

Governing Council 

     July 16

     Monetary policy decisions At today's meeting the Governing Council of the

ECB took the following monetary policy decisions:

     (1) 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 expects

the key ECB interest rates to remain at their present or lower levels until it

has seen the inflation outlook robustly converge to a level sufficiently close

to, but below, 2% within its projection horizon, and such convergence has been

consistently reflected in underlying inflation dynamics.

     (2) The Governing Council will continue its purchases under the pandemic

emergency purchase programme (PEPP) with a total envelope of EUR1,350 billion.

These purchases contribute to easing the overall monetary policy stance, thereby

helping to offset the pandemic-related downward shift in the projected path of

inflation. The purchases will continue to be conducted in a flexible manner over

time, across asset classes and among jurisdictions. This allows the Governing

Council to effectively stave off risks to the smooth transmission of monetary

policy. The Governing Council will conduct net asset purchases under the PEPP

until at least the end of June 2021 and, in any case, until it judges that the

coronavirus crisis phase is over. The Governing Council will reinvest the

principal payments from maturing securities purchased under the PEPP until at

least the end of 2022. In any case, the future roll-off of the PEPP portfolio

will be managed to avoid interference with the appropriate monetary policy

stance.

     (3) Net purchases under the asset purchase programme (APP) will continue at

a monthly pace of EUR20 billion, together with the purchases under the

additional EUR120 billion temporary envelope until the end of the year. The

Governing Council continues to expect monthly net asset purchases under the APP

to run for as long as necessary to reinforce the accommodative impact of its

policy rates, and to end shortly before it starts raising the key ECB interest

rates. The Governing Council intends to continue reinvesting, in full, the

principal payments from maturing securities purchased under the APP for an

extended period of time past the date when it starts raising the key ECB

interest rates, and in any case for as long as necessary to maintain favourable

liquidity conditions and an ample degree of monetary accommodation.

     (4) The Governing Council will also continue to provide ample liquidity

through its refinancing operations. In particular, the latest operation in the

third series of targeted longer-term refinancing operations (TLTRO III) has

registered a very high take-up of funds, supporting bank lending to firms and

households.

     The Governing Council continues to stand ready to adjust all of its

instruments, as appropriate, to ensure that inflation moves towards its aim in a

sustained manner, in line with its commitment to symmetry.

     The President of the ECB will comment on the considerations underlying

these decisions at a press conference starting at 14:30 CET today.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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