The ECB has not cut interest rates to increase the scale of asset purchases of 120 billion euros

The ECB has not cut interest rates to increase the scale of asset purchases of 120 billion euros
On March 12, the European Central Bank’s March monetary policy meeting ended. Unexpectedly, the European Central Bank kept interest rates unchanged and rejoined the global trend of gradual interest rate cuts.The three highest interest rates in Europe all remain unchanged, the deposit convenience rate, the refinancing rate, and the marginal lending rate are maintained at -0.50%, 0.00%, 0.25% unchanged.The European Supreme Council expects that the highest key interest rate in Europe will remain at the current or sloping level until the potential outlook converges to a level close enough but below 2% within its forecast range.However, the European Central Bank has introduced other easing measures.The European Central Bank will temporarily implement more long-term refinancing operations (LTROs) to provide immediate liquidity support to the Eurozone financial system.The European Central Bank said that although the European Economic Management Commission has not seen a substantial shift in tight money markets or overlapping liquidity in the banking system, these operations will provide effective support when necessary.They will be conducted through a bidding process with a fixed interest rate, which is equal to the average interest rate of the deposit instrument.LTROs will provide working capital at preferential conditions to transition to the period before the operation of TLTRO III (Directed Long-Term Refinancing Operation) in June 2020.In essence, in TLTRO III, more favorable terms will apply to all TLTRO III operations that have not been completed between June 2020 and June 2021, and will support banks to those most affected by the spread of coronavirus, especiallySMEs provide loans.During this period, the interest rate of these TLTRO III operations will be 25 basis points lower than the average interest rate of the major refinancing operations in the European system.In addition, before the end of the year, the European Central Bank will increase the scale of asset purchases by an additional 120 billion euros.Combined with the existing asset purchase plan, this will provide favorable financing conditions for the real economy during the period of rising uncertainty.The European Supreme Council expects that, if necessary, the purchase of net asset value will last long enough to enhance the easing effect of its policy interest rate, which will end soon before it begins to increase interest rates.TLTRO III is a policy tool launched by Europe ‘s highest budget. For banks with eligible net loans exceeding the benchmark, the interest rate applicable to TLTRO III business will be reduced.The announcement stated that TLTRO III will apply more favorable terms to all uncompleted TLTRO III operations from June 2020 to June 2021.These businesses will support banks in providing loans to those most affected by the spread of coronavirus, especially small and medium-sized enterprises.Sauna, Ye Wang Gu Zhijuan Cheng Weimiao Edited by Yue Caizhou School against Chun Zeng