ECB leaves key rates unchanged in October as expected

At its monetary policy meeting held on October 29th, the Governing Council of the European Central Bank (ECB) decided to leave the interest rates on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.50%, respectively, as expected.

Follow our live coverage of ECB's policy announcements and the market reaction. 

Market reaction

The EUR/USD pair showed no immediate reaction to the ECB's policy announcements and was last seen losing 0.37% on the day at 1.1701.

Key takeaways from the policy statement as summarized by Reuters

"In the current environment of risks clearly tilted to the downside, ECB will carefully assess incoming information, including dynamics of the pandemic, prospects for a rollout of vaccines and developments in the exchange rate."

"The new round of Eurosystem staff macroeconomic projections in December will allow a thorough reassessment of economic outlook and balance of risks."

"On basis of this updated assessment, ECB will recalibrate its instruments, as appropriate, to respond to the unfolding situation and to ensure that financing conditions remain favourable to support economic recovery and counteract the negative impact of the pandemic on the projected inflation path."

"This will foster the convergence of inflation towards its aim in a sustained manner, in line with its commitment to symmetry."

"ECB will continue its purchases under the Pandemic Emergency Purchase Programme (PEPP) with a total envelope of €1,350 billion."

"These purchases contribute to easing the overall monetary policy stance, thereby helping to offset the downward impact of the pandemic on the projected path of inflation."

"Purchases will continue to be conducted in a flexible manner over time, across asset classes and among jurisdictions."

"This allows ECB to effectively stave off risks to smooth transmission of monetary policy."

"ECB will conduct net asset purchases under PEPP until at least end of June 2021 and, in any case, until it judges that coronavirus crisis phase is over."

"ECB will reinvest principal payments from maturing securities purchased under PEPP until at least end of 2022."

"Net purchases will continue at a monthly pace of €20 billion, together with purchases under an additional €120 billion temporary envelope until the end of the year."

"ECB continues to expect monthly net asset purchases under app to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising interest rates."

"ECB intends to continue reinvesting, in full, principal payments from maturing securities purchased under app for an extended period of time past date when it starts raising interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation."

"ECB will also continue to provide ample liquidity through its refinancing operations."

"In particular, the third series of TLTRO (TLTRO III) remains an attractive source of funding for banks, supporting bank lending to firms and households."