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Bonds Extend Lows, Bounce


BLOCK, 3Y Midcurve Calls


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The ECB's policy statement (found here: ) makes no huge changes to the policy approach, but does accommodate for the recent strategy review:

All policy rates unchanged, as expected

  • Bank revises forward guidance, newly includes the phrase "ensure that inflation stabilises at its two per cent target over the medium term."
  • This replaces old language of "ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry."
  • Retains pace of asset purchases programme at €20bln/month, reiterates that the PEPP envelope can be recalibrated if required and that they are to reinvest maturing PEPP bonds at least through the end-2023.