ECB leaves its main refinancing rate at 0.00%, adds LTRO and expands QE by EUR 120 billion

The European Central Bank (ECB) remained its main refinancing rate unchanged at 0.00 percent on Thursday but announced additional longer-term refinancing operations (LTROs) and a temporary envelope of additional net asset purchases of EUR120 billion.

In its policy statement, the ECB said:

• Additional longer-term refinancing operations (LTROs) will be conducted, temporarily, to provide immediate liquidity support to the euro area financial system;
• Considerably more favourable terms will be applied to TLTROs during period from June 2020 to June 2021;
• Rates on new TLTROs will be 25 basis points below the average rate applied in the Eurosystem's main refinancing operations;
• The maximum total amount that counterparties will henceforth be entitled to borrow in TLTROs is raised to 50% of their stock of eligible loans as at 28 February 2019;
• A temporary envelope of additional net asset purchases of €120 billion will be added until the end of the year, ensuring a strong contribution from the private sector purchase programmes;
• Governing Council continues to expect net asset purchases to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates;
• Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.