MNI ECB Review: April 2021 - A Placeholder Meeting, Focus On June

MNI ECB Review: April 2021 - A Placeholder Meeting, Focus On June

For the full publication please see:

ECB Review April 2021.pdf

As expected, there was no change to monetary policy or significant evolution in the economic outlook. President Lagarde stressed that there was uncertainty around the short-term economic outlook given the conflicting impact of the third Covid wave alongside an acceleration in vaccinations, while stressing that the risks to the medium-term outlook were more balanced. Repeated questions about the PEPP purchase pace – particularly with respect to how this might change in the third quarter – were rebuffed. However, President Lagarde indicated that it was premature at this stage to consider phasing out purchases, marking a slightly dovish tilt. The April meeting was widely seen as a placeholder for the more important June meeting when updated staff macroeconomic projections will be available alongside further evidence on the progress of vaccinations and easing of lockdown measures. Should the vaccination programme progress as hoped and the economic recovery unfold as expected, then the divergence in views within the GC on the PEPP purchase rate and the envelope are likely to widen in the coming months. The hawks are likely to become increasingly vocal if the EU vaccination target is met by September.