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     LONDON (MNI) - 12 March 2020
     At today's meeting the Governing Council decided on a comprehensive package
of monetary policy measures:
     (1) Additional longer-term refinancing operations (LTROs) will be
conducted, temporarily, to provide immediate liquidity support to the euro area
financial system. Although the Governing Council does not see material signs of
strains in money markets or liquidity shortages in the banking system, these
operations will provide an effective backstop in case of need. They will be
carried out through a fixed rate tender procedure with full allotment, with an
interest rate that is equal to the average rate on the deposit facility. The
LTROs will provide liquidity at favourable terms to bridge the period until the
TLTRO III operation in June 2020.
     (2) In TLTRO III, considerably more favourable terms will be applied during
the period from June 2020 to June 2021 to all TLTRO III operations outstanding
during that same time. These operations will support bank lending to those
affected most by the spread of the coronavirus, in particular small and
medium-sized enterprises. Throughout this period, the interest rate on these
TLTRO III operations will be 25 basis points below the average rate applied in
the Eurosystem's main refinancing operations. For counterparties that maintain
their levels of credit provision, the rate applied in these operations will be
lower, and, over the period ending in June 2021, can be as low as 25 basis
points below the average interest rate on the deposit facility. Moreover, the
maximum total amount that counterparties will henceforth be entitled to borrow
in TLTRO III operations is raised to 50% of their stock of eligible loans as at
28 February 2019. In this context, the Governing Council will mandate the
Eurosystem committees to investigate collateral easing measures to ensure that
counterparties continue to be able to make full use of the funding support.
     (3) A temporary envelope of additional net asset purchases of EUR120
billion will be added until the end of the year, ensuring a strong contribution
from the private sector purchase programmes. In combination with the existing
asset purchase programme (APP), this will support favourable financing
conditions for the real economy in times of heightened uncertainty.
     The Governing Council continues to expect net asset purchases 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.
     (4) 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.
     (5) Reinvestments of the principal payments from maturing securities
purchased under the APP will continue, in full, for an extended period of time
past the date when the Governing Council 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.
     Further details on the precise terms of the new operations will be
published in dedicated press releases this afternoon at 15:30 CET.
     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; +44 203 865 3829; email:
[TOPICS: M$X$$$,M$$EC$]

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