04 Jun 2020

Jan Krahnen: "ECB's decision exceeds market expectations"

The scientific director of SAFE assesses the current monetary policy decision of the ECB as a strong emphasis compared to the corona crisis packages that, so far, have been put together at a national level

ECB’s Council has decided to increase the volume of the Pandemic Emergency Purchase Programme (PEPP), launched in March 2020 to contain the corona crisis in the eurozone, by additionally 600 billion euros to a total of 1.35 trillion euros. Furthermore, the horizon for net purchases under the PEPP will be extended to at least the end of June 2021. SAFE director Jan Krahnen comments on the matter as follows: 

"The ECB's decision to increase the PEPP has exceeded market expectations and sets a strong accent, similar to what the German and French governments and the EU Commission already have done with their own measures to contain the Corona crisis. Another important aspect of ECB's decision is the emphasis on flexible implementation, which suggests that security purchases do not follow a fixed national key and at the same time consider corporate values. However, to what extent this takes account of financial stability aspects, will only be determined by the details of the practical implementation of the PEPP”.