The Governing Council of the European Central Bank (ECB) used its meeting on 10 December 2020 to adopt a comprehensive package of monetary policy measures in response to the economic fallout from the resurgence of the coronavirus pandemic in the euro area.

Measures include increasing the envelope of asset purchases and extending the period over which banks can obtain ECB refinancing at more favourable terms. Key ECB interest rates have also been left unchanged.

Additional net purchases of €500 billion

The Governing Council decided to increase the envelope of the pandemic emergency purchase programme (PEPP) by €500 billion to a total of €1,850 billion. It also extended the horizon for net purchases under the PEPP to at least the end of March 2022. In any case, the Governing Council will conduct net purchases until it judges that the coronavirus crisis phase is over. The programme's once again expanded envelope need not be used in full.

The Governing Council also decided to extend the reinvestment of principal payments from maturing securities purchased under the PEPP until at least the end of 2023. In any case, the future roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance.

More favourable refinancing now through to June 2022

The ECB Governing Council will also continue to provide ample liquidity through its refinancing operations. The period over which the particularly favourable conditions of the third series of targeted longer-term refinancing operations (TLTRO III) will apply has been extended by twelve months to June 2022.

Key interest rates unchanged

The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50%, respectively. The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.