La European Central Bank prepares to reload the bazooka. At the end of Thursday's Governing Council, Eurotower announced that in December it will “recalibrate” monetary policy measures in an "appropriate way to respond to the evolution of the situation". The number one of the ECB, Christine Lagarde, specified in the press conference that the revision “will concern all tools” available to Frankfurt, “none excluded”.
In a month, therefore, the central bank will approve a new monetary easing to stem the economic devastation produced by the anti-Covid measures. Meanwhile, the pandemic runs at a higher pace every day and - always on Thursday - Germany and France have introduced new restrictions to plug the infections, now out of control.
"The Eurozone is losing momentum faster than expected – continued Lagarde – The resumption of Covid infections has caused a clear deterioration on the near-term economic outlook. The third quarter data, which will be released tomorrow, could surprise on the upside, while those of the fourth on the downside”. This is why Lagarde is asking Europe to "make the Next Generation Eu operational without delay"., overcoming the conflicts of the last few months on the Recovery Fund and on the 2021-2027 EU budget.
In the press release released after the board meeting, the ECB explains that next month the Council "will carefully evaluate the information that will arrive, including the dynamics of the pandemic, the prospects for the diffusion of a vaccine and exchange rates". Furthermore, in December the new economic forecasts of the ECB technicians will be available, "which will allow a re-examination of the prospects and risks".
In any case, the scenario is bleak: according to Lagarde, a "significant moderation" of economic activity in the euro area is looming in the fourth quarter, which will hit especially the services, the sector most affected by the restrictive measures against the spread of Covid.
As for theinflation, “will remain negative in the Eurozone until the beginning of 2021 – added Lagarde – Pressures on prices will continue to be subdued due to euro appreciations and weak demand, particularly in sectors such as tourism”.
For the moment, however, remains confirmed at 1.350 billion euros the amount of the emergency securities purchase program against the effects of the pandemic (the Peep, launched in March e boosted in June), which will last “at least until the end of June 2021”.
Also confirmed the intention of the ECB to reinvest in the same products – at least until the end of 2022 – the proceeds of securities purchased with the Pepp and then maturing.
At the moment it doesn't even change “traditional” quantitative easing, the bond purchase program already underway before the pandemic, which continues at a rate of 20 billion a month.
Finally, as expected, official interest rates of the euro area remain at historic lows: zero on main refinancing operations, 0,25% on marginal ones and -0,50% on deposits in the coffers of the ECB.
After Lagarde's press conference, Piazza Affari reverses course and moves into positive territory by 0,3%.
