>> GROUP: Shadow ECB Council / EZB-Schattenrat  Frederik Ducrozet

Frederik Ducrozet: In line with recent ECB communication, we expect the Pandemic Emergency Purchase Programme (PEPP) to be increased by at least EUR500bn, and extended until mid-2022. We also expect the ECB to announce a new series of TLTRO-IV including a longer discount period, until June 2022, with a minimum TLTRO interest rate as low as -1%.

In addition to a longer duration of policy support, the ECB might think of various ways to provide additional stimulus and financial backstops to surprise markets. Including corporate fallen angels in the PEPP on an ex ante basis is possible. The TLTRO minimum rate could be cut to -1.25%, and mortgage loans could be included in the TLTRO eligible loan book.

Ultimately, we continue to expect the ECB to increase its regular QE programme, the Asset Purchase Programme (APP), to address the issue of chronically low inflation, while transferring some flexible features of the PEPP to the APP, most likely after the strategy review is concluded.
>> Kontakt