ECB leaves its main refinancing rate at 0.00% in May; pledges to continue to conduct net asset purchases under PEPP with total envelope of EUR1,850 billion until at least the end of March 2022

The European Central Bank (ECB) left its main refinancing rate unchanged at 0.00 percent on Thursday, as widely expected. Its interest rates on the marginal lending facility and the deposit facility were also left unchanged at 0.25 percent and -0.50 percent, respectively.

In its policy statement, the ECB said:

• Governing Council expects key ECB interest rates to remain at their present or lower levels until it has seen inflation outlook robustly converge to level sufficiently close to, but below, 2% within projection horizon;
• Governing Council will continue to conduct net asset purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of EUR1,850 billion until at least the end of March 2022 and, in any case, until it judges that coronavirus crisis phase is over;
• Governing Council expects net purchases under PEPP over coming quarter to continue to be conducted at significantly higher pace than during the first months of the year;
• Governing Council will purchase flexibly according to market conditions and with view to preventing tightening of financing conditions;
• If favourable financing conditions can be maintained with asset purchase flows that do not exhaust envelope over net purchase horizon of PEPP, envelope need not be used in full;
• Governing Council will continue to reinvest the principal payments from maturing securities purchased under PEPP until at least the end of 2023;
• Net purchases under asset purchase programme (APP) will continue at monthly pace of EUR20 billion;
• Governing Council will continue to provide ample liquidity through its refinancing operations (TLTROs);
• Governing Council stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in sustained manner, in line with its commitment to symmetry