European Central Bank Ramps Up Asset Purchases in Light of Pandemic

On June 4, 2020, the European Central Bank (ECB) announced it would increase its envelope of asset purchases by €600 billion to a total of €1.35 trillion. The increased purchases will further the central bank’s policy of monetary easing in order to help households and businesses deal with the economic effects of the COVID-19 pandemic. The increase comes in response to disinflation and fears of a possible deflationary spiral.

The ECB plans to continue asset purchases until it believes the coronavirus crisis is over and plans to reinvest any payments from maturing assets into further purchases. European interest rates will remain unchanged with deposit rates still negative. The ECB expects to keep rates at current levels or lower until inflation nears its 2% target.

By Maxwell Qian

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