ECB should retain flexibility of emergency stimulus scheme - Panetta

ECB should retain flexibility of emergency stimulus scheme - Panetta

ECB should retain flexibility of emergency stimulus scheme - Panetta

The European Central Bank must not reduce stimulus too early and should retain the exceptional flexibility of its emergency bond purchase scheme beyond the current crisis, ECB board member Fabio Panetta said on Monday.

Aiming to sure up the euro zone economy during a deep recession, the ECB agreed on exceptional flexibility for its 1.85 trillion euro Pandemic Emergency Purchase Programme last year. The scheme could end as soon as next March, raising the risk of an ECB retreat in some markets.

More traditional instruments, such as the Asset Purchase Programme, make it difficult for the ECB to concentrate bond purchases in certain markets or to flexibly vary the size of its intervention.

“The pandemic emergency purchase programme has shown the benefits of flexible monetary policies when differences in financing conditions across countries represent a persistent obstacle to the transmission mechanism,” Panetta said.

“We should strive to retain the ‘unconventional flexibility’ that has served us well during the pandemic,” Panetta told a conference.

 

EURUSD 

Economists at Credit Suisse estimate: "EURUSD reversed sharply off its highs again on Friday from just ahead of a key cluster of resistances at 1.1986/1.2007 – the 200-day average, price resistance and the 38.2% retracement of the May/June fall, in line with our bias for this zone to cap the market for a resumption of the sell-off from late May.”

 

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