ECB leaves its main refinancing rate at 0.00% in March; expects purchases under PEPP over next quarter to be conducted at “significantly higher pace” than during first months of the year

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%;
• Governing Council will continue to conduct net asset purchases under pandemic emergency purchase programme (PEPP) with total envelope of EUR1,850 billion until at least end of March 2022;
• Governing Council expects purchases under PEPP over next quarter to be conducted at significantly higher pace than during first months of this year;
• Governing Council will purchase flexibly according to market conditions and with view to preventing tightening of financing conditions;
• PEPP envelope can be recalibrated if required to maintain favourable financing conditions;
• Governing Council will continue to reinvest the principal payments from maturing securities purchased under the PEPP until at least end of 2023;
• Net purchases under asset purchase programme (APP) will continue at monthly pace of EUR20 billion;
• Governing Council continues to expect monthly net asset purchases under the APP to run for as long as necessary and to end shortly before ECB starts raising its key interest rates;
• Governing Council also intends to continue reinvesting, in full, the principal payments from maturing securities purchased under APP for extended period of time;
• Governing Council will continue to provide ample liquidity through its refinancing operations
• Governing Council stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry.