In the hearing at European Parliament’s Committee on Economic and Monetary Affairs, ECB President Christine Lagarde said two main factors called for additional monetary policy announced at the last meet. They are the “deteriorating inflation outlook threatening our medium-term price stability objective and the unwarranted tightening of financial conditions.”
Hence, the central bank decided to rise the amount of the PEPP by additional EUR 600B to EUR 1350B, extend the program until at least end of June 2021, and to reinvest maturing assets until at least end of 2022.
She emphasized that the crisis-related measures are “temporary, targeted and proportionate”. And the measures “underscore the Governing Council’s continued determination and readiness to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner.”
The PEPP expansion will “prove to have been essential in avoiding an even deeper recession and in quickening our pathway to normalisation”
