OPINION
Market Rating Before FOMC MeetingJan 31
What to expect from the ECB Accounts?
European Central Bank’s monetary policy accounts for the meeting dated December 15 and 16 will be published tomorrow at 14:30 (GMT+2).
ECB Governing Council decided to keep 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 Council expects to conduct net asset purchases under the PEPP at a lower pace than in the previous quarter. It will discontinue net asset purchases under the PEPP at the end of March 2022.
The Council also decided on a monthly net purchase pace of €40 billion in the second quarter and €30 billion in the third quarter under the APP. From October 2022 onwards, they will maintain net asset purchases under the APP at a monthly pace of €20 billion for as long as necessary to reinforce the accommodative impact of its policy rates.
We will look for reasons for these decision in the next ECB accounts and seek the motive of the Governing Council members.
Raising its inflation projections from 2.2 to 2.6 percent for 2021, from 1.7 percent to 3.2 for 2022, and from 1.5 to 1.8 percent for 2023, the Bank might have left the door open for adjusting net purchases against the anticipated price pressures.
Finally, despite the interest rate hike expectations in 2022, which are reflected on euro assets in international markets, the assessments of the Members of the Governing Council and the details of the hawkish majority will be followed in the accounts.
ECB Governing Council decided to keep 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 Council expects to conduct net asset purchases under the PEPP at a lower pace than in the previous quarter. It will discontinue net asset purchases under the PEPP at the end of March 2022.
The Council also decided on a monthly net purchase pace of €40 billion in the second quarter and €30 billion in the third quarter under the APP. From October 2022 onwards, they will maintain net asset purchases under the APP at a monthly pace of €20 billion for as long as necessary to reinforce the accommodative impact of its policy rates.
We will look for reasons for these decision in the next ECB accounts and seek the motive of the Governing Council members.
Raising its inflation projections from 2.2 to 2.6 percent for 2021, from 1.7 percent to 3.2 for 2022, and from 1.5 to 1.8 percent for 2023, the Bank might have left the door open for adjusting net purchases against the anticipated price pressures.
Finally, despite the interest rate hike expectations in 2022, which are reflected on euro assets in international markets, the assessments of the Members of the Governing Council and the details of the hawkish majority will be followed in the accounts.
