PRIMER: ECB account of the June 10th meeting to be released at 12:30BST/07:30EDT

As expected, the ECB stood pat on rates and maintained the size of the PEPP envelope at EUR 1.85trln, which will run until at least the end of March 2022. The key change to the policy statement was the inclusion of guidance that the Governing Council expects purchases under the PEPP over the next quarter to be conducted at a significantly higher pace than during the first months of this year. At the accompanying press conference, President Lagarde stated that the decision on this front was unanimous. When questioned what “significantly” meant when it came to purchases; and although Lagarde refrained from giving a specific number, sources after the meeting said that policymakers agreed on a monthly PEPP purchase target at the meeting, saying it will be lower than EUR 100bln but well above the EUR 60bln seen in February. Sources also noted that opinions differed, with one source suggesting yields should be pushed down to the range seen in December, while others said improved prospects meant part of the recent yield increase was justified. Lagarde stressed the importance of financial conditions for policymaking, but refrained from giving detail on how to exactly quantify these metrics; any further clarity on this front could be a source of interest within the accounts. Meanwhile, the ECB's macro projections saw little changes to the growth forecasts, whilst 2021 inflation was revised higher to 1.5% from 1.0% amid transitory factors, and headline HICP is seen cooling to 1.4% by 2023, and therefore short of the ECB’s target, something which could be food for thought amid the upcoming strategic review. On a more optimistic note, the ECB now classifies medium-term risks as more balanced. That said, this viewpoint might be considered somewhat dated given the recent tightening of lockdown restrictions in some parts of the Eurozone.

09 Jul 2021 - 09:00- Fixed IncomeImportant- Source: Newsquawk