Free Trial

MNI POLICY: PEPP Hike Possible; ECB Supports IMF SDR Facility

By Luke Heighton
     FRANKFURT (MNI) - The European Central Bank will increase the size,
duration and composition of its emergency PEPP programme if necessary, president
Christine Lagarde said Thursday, as she called more coordinated global efforts
to counter the social and economic fallout caused by the Covid-19 pandemic.
     The ECB is also "open to exploring a possible new special drawing rights
(SDR) allocation for all IMF members," Lagarde told IMF members in a virtual
     Here are the key points from the speech:
     --"Further international efforts will be needed to counter the consequences
of the outbreak and spread of the coronavirus," Lagarde said.
     "The Governing Council," she said, is "fully prepared to increase the size
of its asset purchase programmes and adjust their composition, by as much as
necessary and for as long as needed." The Governing Council will explore "all
options and all contingencies to support the economy through this shock."
     --Given the nature of the situation, it is "extremely difficult to predict
the likely extent and duration of the imminent recession and subsequent
recovery,"she continued. However, headline inflation is expected to decline
further in the near term, while the implications of the coronavirus crisis for
inflation over the medium term are surrounded by high uncertainty.
     --In addition to swap line arrangements already agreed with some EU central
banks to provide euro liquidity, the ECB is assessing further requests for
euro-providing swap lines in line with its mandate, Lagarde said.
     --The ECB is "open to exploring a possible new special drawing rights (SDR)
allocation for all IMF members. The October 2019 package on IMF resources needs
to be implemented speedily to help maintain the IMF's lending capacity of USD1
trillion," Lagarde said.
--MNI Frankfurt Bureau; +49-69-720-146; email:
--MNI London Bureau; +44 203 865 3829; email:
[TOPICS: M$X$$$,M$$EC$]

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.