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Central banks in overdrive

Emily Nicol
Chris Scicluna
  • After the ECB’s night-time PEPP announcement, the BoJ upped its asset purchases, the RBA cut its cash rate and started yield curve control, and the Fed announced a new facility targeted at money market funds.

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Can the PEPP improve the euro area’s financial health?

Chris Scicluna
  • With questions increasingly raised about its commitment to counter the economic and financial impact of Covid-19, the ECB announced the PEPP, a new flexible €750bn asset purchase programme to try to mitigate fragmentation risks.

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Sabotage at the ECB

Emily Nicol
Chris Scicluna
  • Efforts to calm the euro area bond market are in tatters this morning following some extraordinary inflammatory remarks from Austrian central bank governor Holzmann. BTPs are selling off, and euro area stocks are plunging, raising the need for new aggressive policy sooner rather than later.

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ECB to deploy all available tools?

Emily Nicol
Chris Scicluna
  • The ECB’s Governing Council announcement is today’s main event.  Not least given the emergency actions of the Fed and BoE, we expect the ECB to unveil a package of measures. Indeed, it will certainly disappoint markets if it fails to deliver at least a rate and anew lending facility. 

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BoE announces emergency easing package

Emily Nicol
Chris Scicluna
  • In an unscheduled (but not necessary unexpected) announcement, the BoE cut Bank Rate by 50bps to 0.25% and introduced a new Term Funding Scheme to provide incentives for banks to lend to SMEs. This comes ahead of today’s UK Budget, where the government is expected  to confirm plans for significant fiscal stimulus for the first time since the Global Financial Crisis, and probably by the most in almost three decades.

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