23 October 2020 | ECB set to expand monetary policy
The Bloomberg consensus for the Covid-19 Quantitative Easing program, known as PEPP, has increased from 350bn euro to 500bn euro due to the current explosion in virus spread, with most participants looking for a decision in December. The PEPP program is anticipated to finish at the end of 2021, rather than June 2021 and interest rates are expected to stay on hold till December 2022. Three factors play against an early easing: 1. Crucial data is missing for the December projections into 2023; 2. Roughly half the PEPP is still available; and 3. Curves in the periphery are at an all-time lows. Nonetheless, the ECB is likely to flag further easing at its meeting on the 29th of October.