The European Central Bank has decided this Thursday not to alter its monetary stimulus program and leave interest rates intact at 0% —that is, it does not demand any reward from banks that borrow money from it. Neither does the rate to banks for their deposits, -0.5%. The first meeting of the year had not generated the expectations of the momentous December face-to-face meeting, when the body chaired by Christine Lagarde recalibrated its tools and announced the expansion of the pandemic-linked debt purchase program (PEPP) by 500,000 million euros. , now endowed with 1.85 trillion.
The absence of changes has confirmed that today has been a transition meeting. With cheap financing to governments assured at least until March 2022 and even beyond: “until you consider that the crisis phase of the coronavirus is over,” according to the statement issued by the bank this Thursday, the urgencies have disappeared. The markets have welcomed the battery of liquidity deployed by the entity – the Spanish Treasury issued for the first time in its history 10-year debt at negative interest rates – and the Eurobanco entered an analysis phase before moving again tab: wait and see if the vaccine allows the economy to reopen in order to put restrictions on mobility in the drawer or, on the contrary, the third wave forces us to get back at the checkbook; wait and see if the money injected into the system from Frankfurt and capitals will make languishing inflation pick up, also weighed down by the strength of the euro against the dollar. And wait and see the evolution of the rebound of 3.9% of GDP that is forecast this year for the euro zone, threatened by the increase in infections and the slowness of vaccination in Europe, much slower than in the United Kingdom and the United States. United.
The ECB has been willing to be flexible in implementing the pandemic asset purchase program. This Thursday he affirmed that if the cheap financing it provides to governments can continue without depleting the 1.85 trillion of the PEPP, it will not hesitate to leave a part of it unused. In the reverse scenario, it does not rule out expanding the endowment “if it is necessary to maintain favorable financing conditions that help to counteract the negative impact of the pandemic on the path of inflation.”
The French leader could give more clues about the health of the European economy in the speech she will make at 2.30 pm. For now, while it doesn’t hit the gas, it doesn’t brake either. Last week, at a Reuters agency event, he made it clear that the time has not come to withdraw stimulus. “Any kind of adjustment at this point would be totally unjustified,” he said. Even more so when the vaccination campaign advances at very uneven rates in Europe, and since the last meeting of the ECB, the risks have grown, with the restrictions in countries such as Germany, France or the Netherlands taking longer than expected. The spread of the third wave has caused many analysts to already bet on a stagnation in the first quarter, and even the possibility of a return to negative growth rates gaining ground. The ECB itself, as well as research services such as BBVA, have postponed the start of the recovery to the second half of the year, and estimate that the bulk of the rebound will be delayed to 2022.