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The pandemic emergency purchase programme (PEPP) must remain a temporary crisis instrument, European Central Bank Executive board member Yves Mersch said on Thursday.

Additional takeaways

“We would not need to make use of the full PEPP envelope if the governing council were to assess that market tensions had eased sufficiently.”

“We are mindful that the size of our balance sheet. The significant stock of acquired assets and reinvestments of the maturing principal payments can have implications for market functioning and price formation.”

“The sheer size of the PEPP also goes beyond its primary backstop function by providing additional support to the monetary policy stance.”

Market reaction

The EUR/USD pair largely ignored these comments and was last seen losing 0.37% on the day at 1.1207.