MNI: TEXT OF ECB GOVERNING COUNCIL MONETARY POLICY DECISION

     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: jason.webb@marketnews.com

[TOPICS: M$X$$$,M$$EC$]