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ECB holds rates steady, affirms €1.85 trillion pandemic stimulus

The European Central Bank on Jan. 21 left its policy rates unchanged and affirmed the size and duration of its €1.85 trillion Pandemic Emergency Purchase Programme, or PEPP.

The interest rate on the main refinancing operations remained at 0%, the ECB said, while the rates on the marginal lending and deposit facilities stayed at 0.25% and negative 0.50%, respectively.

The ECB said it will continue to purchase assets under the PEPP until at least the end of March 2022, or until the coronavirus crisis is over. The bank expanded the PEPP by €500 billion and extended its duration at its last meeting in December 2020.

Meanwhile, net purchases under the Asset Purchase Programme will continue at a monthly pace of €20 billion, the ECB said, adding that the program would run for as long as necessary.

The policy decision comes amid a spike in COVID-19 cases that has forced European governments to reimpose stringent lockdown restrictions to stem further spread of the virus.

Principal payments from maturing securities purchased under the PEPP will continue to be reinvested until at least the end of 2023, according to the ECB. The central bank also vowed to continue providing liquidity through its targeted longer-term refinancing operations.

In December, the ECB lowered the growth forecast for 2021, saying the economic threat of a resurgence in COVID-19 cases and lockdown restrictions "had led to a weaker outlook at the turn of the year," the minutes of the session showed.