In a unexpected move, ECB announced a massive EUR 750B Pandemic Emergency Purchase Programme (PEPP). The temporary program is for countering the “serious risks to monetary policy transmission mechanism” and the economy outlook posed by “outbreak and escalating diffusion” of the coronavirus. Purchases of private and public sector securities will be conducted until the end of 2020, including all asset categories under the existing APP.

ECB Governing Council pledged to “ensure that all sectors of the economy can benefit from the supportive financing conditions that enable them to absorb this shock”. Also, it’s “fully prepared to increase the size” of the purchases and adjust the composition, “by as much as necessary and for as long as needed”. The central bank will also consider to revise the “self-imposed limits” that might hamper its actions.

“Extraordinary times require extraordinary action,” ECB President Christine Lagarde said. “There are no limits to our commitment to the euro. We are determined to use the full potential of our tools, within our mandate.”

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Euro recovers mildly against Dollar and Yen after the unexpected announcement. But upside is so far limited.

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