The European Central Bank decided to keep all interest rates unchanged as expected announcing its asset purchase programme would be reduced after September to December by 15 billion EUR per month, and then to be halted altogether. This means that since 2019 there will be no net asset purchases except for reinvestments. The key points look as follows:
- ECB to keep rates unchanged until at least summer of 2019
- it says net asset purchases to be halted by end of December
- asset purchases will be 15 billion EUR/month from Oct to Dec
- ECB will reinvest maturing debt for as long as necessary for extended period after net buying ends
- it says decision on APP depends on incoming data
- ECB ties rate outlook to sustainable inflation path
All of these points were expected (beyond a QE reduction in the last quarter), hence there is no too much for hawks to cheer. The euro saw a spike immediately after the decision, but then it erased all gains slumping below 1.1750 (a big figure from its local peak). German 10Y yield rose to above 0.51% just to drop to 0.46% afterwards. The press conference of Mario Draghi will kick off at 1:30 pm BST.
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