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“We consider that the best way for us to achieve our monetary policy aims is to preserve favourable financing conditions throughout the pandemic period,” European Central Bank chief economist Philip Lane said on Monday, as reported by Reuters.

Additional takeaways

“The Governing Council of the ECB routinely looks at a wide range of measures to gauge the state of financing conditions.”

“The focus on credit conditions in the banking system on one side and the bond markets on the other is consistent with the main methods used by central banks.”

“If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the PEPP envelope, the envelope need not be used in full.”

Meanwhile, Gabriel Makhlouf, ECB policymaker and Irish Central Bank Governor,  argued on Monday that they are unlikely to overshoot the 2% inflation target unintentionally.

Market reaction

The EUR/USD pair showed no reaction to these remarks and was last seen losing 0.2% on the day at 1.2148.