ECB Meeting Accounts: ECB to maintain accommodative policy, no risk of overheating

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The European Central Bank’s (ECB) policymakers reassured that they will maintain an accommodative monetary policy for as long as necessary and saw no risk of overheating, the ECB’s March Monetary Policy Meeting Accounts showed on Thursday.

Key takeaways as summarized by Reuters

“The view was held that the increase observed in sovereign yields had remained contained and to some extent decoupled from developments in the United States.”

“It was also noted that these increases had taken place from very low levels.”

“It was underlined that the flexibility embodied in the PEPP was symmetric.”

“Special attention needed to be paid to sovereign yields and risk-free interest rates.”

“It was remarked that a rise in risk-free interest rates and GDP-weighted sovereign yields needed to be pronounced and persistent in order to exert a material impact.”

“All members joined a broad consensus around the proposal put forward by Mr Lane, on the understanding that the total PEPP envelope was not being called into question in the current conditions and that the pace of purchases could be reduced.”

“Members concurred with Mr Lane that ample monetary stimulus remained necessary.”

“View was put forward that the tightening might not be sizeable and persistent enough to affect broader financing conditions materially.”

“It was remarked that the Governing Council needed to avoid giving the impression of being overly focused on sovereign yields or reacting mechanically.”

“It was argued that higher real rates were not necessarily a cause for concern.”

“The recovery was expected to vary across the different GDP components and to rely quite heavily on fiscal support over the next two years.”

Market reaction

The EUR/USD pair edged modestly higher on this publication and was last seen gaining 0.07% on a daily basis at 1.1878.