In addition to the vaccine crisis, lockdown measures implemented not to disrupt the supply chain of public authorities in order to minimize increasing cases are putting downward pressure on macroeconomic indicators announced during the period in the Eurozone, which has become a Coronavirus hub. This pressure also makes the views of European Central Bank (ECB) policymakers important for the markets.

At the last meeting on January 20-21, the European Central Bank kept the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.50% respectively. The Governing Council stated that it 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. The Governing Council also decided that the purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1,850 billion will continue. Furthermore, net asset purchases under the PEPP will continue until at least the end of March 2022 and, in any case, until the Council judges that the coronavirus crisis phase is over. It will also continue to reinvest the principal payments from maturing securities purchased under the PEPP until at least the end of 2023. "PEPP can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of inflation," the Council noted.

According to the decisions, the Governing Council will continue to provide ample liquidity through its refinancing operations. In particular, the third series of targeted longer-term refinancing operations (TLTRO III) remains an attractive source of funding for banks, supporting bank lending to firms and households. In addition, net purchases under the asset purchase programme (APP) will continue at a monthly pace of €20 billion and the Council expects monthly net asset purchases under the APP 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.

ECB President Christine Lagarde stated after the decision that the measures taken to fight against Coronavirus outbreak have caused significant problems in the service sector, sharing her expectation that inflation rates remain low for this reason and that the economy will probably contract in the last quarter.

Adding that they closely follow the developments in the euro, Lagarde stated that the increase in the exchange rate negatively affected the path of inflation. Lagarde also stressed that uncertainty remains due to the outbreak and they will continue purchases under the asset purchase program to stabilize the economic outlook.

Monetary Policy Accounts of for the meeting held on January 20-21 will be published tomorrow at 14:30 (GMT+2). And we will closely review the thoughts of the Council members who decided not to change interest rates and the Pandemic Emergency Purchase Program. The minutes may also include signs of what role the ECB will play in asset purchases, so that tensions between the European Union and vaccine suppliers do not pose more risks on macroeconomic indicators.