ECB to stay easy and steady for longer by TS Lombard

Double-dip recession risks have increased – the ECB will add more stimulus this week
The focus will be on extending support for longer through PEPP and TLTROs
Asset purchases in response to the pandemic could reach €2.7trn by June 2022
TLTROs will be made more generous, but its success hinges on credit guarantees
Specifically, we expect the following:
- A €500bn increase in the size of the PEPP
- PEPP purchases to continue at least until December 2021 and possibly until June 2022
- The APP to continue at a faster rate of €30-35bn/month
- More TLTRO operations extending until March 2022; a further easing of TLTRO modalities
- An increase in the tiering multiplier
EUR strength is not yet a concern for the ECB. This is good news because the central bank’s ability to push the currency lower is limited.