ECB to apply flexibility in PEPP reinvestment. Will accelerate anti-fragmentation program

• Governing Council said it met today to exchange views on the current market situation
• Pandemic has left lasting vulnerabilities in the eurozone economy which are indeed contributing to the uneven transmission of the normalisation of our monetary policy
• Based on this assessment, decided to apply flexibility in reinvesting redemptions coming due in the PEPP portfolio
• In addition, decided to mandate the relevant eurosystem committees together with the ECB services to accelerate the completion of the design of a new anti-fragmentation system

This isn't a bazooka. There's basically a promise of more to come but the ECB is hamstrung bu the German constitutional court and monetary financing rules. The initial reaction from the Italian bond market tells the story, yields up to 3.96% from 3.90%.

EUR EUR The euro (EUR) is the official currency of the European Union (EU) and 19 of 27 member states at the time of writing. It is the second most-traded currency worldwide in forex markets after the US dollar.The euro was originally introduced back on January 1, 1999, having replaced the European Currency Unit. Banknotes and physical euro coins subsequently entered circulation only in 2002.Upon its adoption, the euro replaced domestic currencies in participating EU member states. The rise in its value The euro (EUR) is the official currency of the European Union (EU) and 19 of 27 member states at the time of writing. It is the second most-traded currency worldwide in forex markets after the US dollar.The euro was originally introduced back on January 1, 1999, having replaced the European Currency Unit. Banknotes and physical euro coins subsequently entered circulation only in 2002.Upon its adoption, the euro replaced domestic currencies in participating EU member states. The rise in its value Read this Term/USD is up 23 pips to 1.0440.

Full statement:

Statement after the ad hoc meeting of The ECB Governing Council

Today the Governing Council met to exchange views on the current market situation. Since the gradual process of policy normalisation was initiated in December 2021, the Governing Council has pledged to act against resurgent fragmentation risks. The pandemic has left lasting vulnerabilities in the euro area economy which are indeed contributing to the uneven transmission of the normalisation of our monetary policy across jurisdictions.

Based on this assessment, the Governing Council decided that it will apply flexibility in reinvesting redemptions coming due in the PEPP portfolio, with a view to preserving the functioning of the monetary policy transmission mechanism, a precondition for the ECB to be able to deliver on its price stability mandate. In addition, the Governing Council decided to mandate the relevant Eurosystem Committees together with the ECB services to accelerate the completion of the design of a new anti-fragmentation instrument for consideration by the Governing Council.