The European Central Bank and its president, Christine Lagarde, face another crucial test this week as they hold off on any new monetary stimulus, but try not to destroy a belief that more firepower is available, CNBC reports. The Frankfurt institution will likely stay put after last month’s extension and enlargement of its PEPP (Pandemic Emergency Purchase Program), which climbed by 600 billion euros to 1.35 trillion euros. “As (the) lender of last resort, the ECB has stabilised markets and prevented a major financial crisis which would have exacerbated the recession,” said Florian Hense, an ECB watcher at Berenberg Bank in a recent research note. Indeed, the ECB’s bond buying in the final week of June fell to its slowest pace since the expansion of the program, according to data released by the ECB. That could suggest some “tapering” of PEPP in the future, especially if the economy does do better than expected.

Source: The Standard July 16, 2020 06:11 UTC