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On Thursday, the European Central Bank (ECB) decided to keep interest rates and it QE programs unchanged as expected. Analysts at BBVA Research point out the meeting did not provide any surprises. They see the central bank continues to be very cautious but does not seem to be ready to extend the PEPP for the moment unless further risks on the pandemic and on the economy materialize.

Key Quotes: 

“2The Governing Council showed some concern over the implications of euro appreciation for inflation, but with the usual language that they do not target the euro.”

“The strategy review by the ECB will proceed as expected and will be published in the second half of 2021.”

“Did not provide any surprises on the reaction by the ECB to the hottest topics post summer – the most recent inflation figures and especially the appreciation of the euro. The ECB continues to be very cautious and dovish but does not seem to be ready to extend the PEPP for the moment, unless further risks on the pandemic and hence on the economy materialize.”