Comments from ECB President Lagarde in the Q&A:
- Have slowed PEPP purchases because markets have stabilized
- Highlights flexibility in PEPP
- Says baseline is that they will use the full PEPP envelop but if there is 'very significant upside' they might not
The comment on the full PEPP use is on the dovish side; that wasn't entire clear before.
- We really felt we were in a good place at the moment on monetary policy
- Tiering multiplier is working as intended
- We don't see at the moment any reason to change tiering; haven't discussed it
- Our assumption is that the European recovery fund will 'come about' with a mix of loans and grants
- Won't let capital key convergence impair ECB policy
The shift away from a strict capital key is notable. It's good for periphery bonds.
- Policy revise to end in H2 2021
This event has ended and it was not notable for the euro moves. The market generally shrugged it off and it was indeed the placeholder meeting that most envisioned ahead of the ECB's August vacation.
