MNI BRIEF: ECB Decision Hints At PEPP For Longer

The European Central Bank kept policy on hold Thursday, reaffirming what it for the first time called its "very accommodative monetary policy stance," and hinting that it may extend its emergency asset purchase program beyond the Covid-19 pandemic's crisis phase.

There is also a change in language from the press release accompanying the December monetary decision, which stated that net asset purchases under the pandemic emergency purchase program (PEPP) will be conducted until at least the end of March 2022, and in any case "until the Governing Council judges that the coronavirus crisis phase is over." January's statement adds that "purchases under the PEPP will be conducted to preserve favourable financing conditions over the pandemic period."

However reference to the ECB's "very accommodative monetary policy stance" and inclusion that the full envelope of the PEPP may not be utilized could indicate there is growing tension among central bank governors over the need for further major easing, as indicated by MNI sources this week.