ECB’s massive EUR 750B Pandemic Emergency Purchase Programme announced overnight won praises from top European politicians. French President Emmanuel Macron said he gives “full support for the exceptional measures taken this evening by the ECB.” He added,”it is now up to us, the European states, to step up to the plate via our budgetary interventions and to show a bigger financial solidarity at the heart of the euro zone.”
Also from France, Finance Minister Bruno Le Maire said “The plan that the European Central Bank announced is the right one… It’s a massive plan because it foresees 750 billion euros ($813 billion) in asset purchases, it will have a strong economic impact because it will allow companies to be better financed and it will have a major political impact, it will reduce the risk of fragmentation in the euro zone.”
Germany’s Economy Minister Peter Altmaier also said, “I hope these measures will also make it clear to the stock markets, to the markets today that Europe will protect its interests and Europe is determined to overcome this crisis”.
The steep fall in Italian bond yield today is also a strong vote of confidence for the ECB. 10-year yield hit as high as 2.961 yesterday but it’s now back at around 1.6.
SNB stands pat at -0.75%, expects negative inflation and growth this year
SNB kept sign deposit rate unchanged at -0.75% today. It noted that coronavirus is posing “exceptionally large challengers” for Switzerland, and the expansionary monetary policy is “more necessary than ever” for ensuring appropriate monetary conditions. The central bank is “intervening more strong” in the FX markets to stabilize the situation. Both negative interest and interventions are “necessary to reduce the attractiveness of Swiss franc investments”.
Additionally, SNB is raising the exemption threshold as of April 2020 to reduce the negative interest burden on the banking system. The threshold factors will increase from 25 to 30. It’s also examining whether a “relaxation of countercyclical buffer” would be possible.
New conditional inflation forecast is lowered primarily due to “lower oil prices, significantly weaker growth prospects and stronger Swiss franc”. Inflation is expected to be in slightly negative territory at -0.3% this year, turned slightly positive to 0.3% in 2021, then rise to 0.7% in 2022. Growth is “likely to be negative” for 2020 as a whole.
Full release here.