ECB keeps pouring in cheap money as virus woes persist

[FRANKFURT] The European Central Bank on Thursday kept its massive pandemic-fighting stimulus package in place, in a bid to help Europe's ailing economies overcome the devastating impact of the coronavirus crisis.

After calming jittery markets last month by promising to "significantly" step up the pace of its pandemic emergency bond purchases, the ECB's governing council said such buys will keep going at the same accelerated rate.

The Frankfurt institution on Thursday held interest rates at historic lows, including a deposit rate of -0.5 per cent - meaning banks pay to store excess cash with the ECB.

The ECB's 1.85 trillion euro (S$2.96 trillion) pandemic emergency bond purchasing programme (PEPP), set to run until March 2022, was also kept intact, although the council stressed it stood ready to "adjust all of its instruments, as appropriate", should it become necessary.

The goal of the ECB's measures, which also include super cheap loans for banks, is to keep borrowing costs low to encourage spending and investment in the 19-nation currency club in order to drive up growth and inflation.

Ms Lagarde may also repeat her plea for eurozone governments to share the load through fiscal stimulus.

Those efforts were given a boost when a top German court on Wednesday threw out a legal challenge against the European Union's 750-billion-euro recovery fund, paving the way for its ratification.

Following last month's pledge to accelerate debt purchases in response to rising bond yields, the ECB's weekly PEPP purchases have averaged 17 billion euros, compared to around 12 billion in January and February.

AFP