ECB reviews debt purchase schedule due to Russian invasion of Ukraine

The European Central Bank (ECB) stated that the Russian invasion of Ukraine is a turning point and therefore has decided to review the schedule of debt purchases for the coming months.

After the meeting of the Governing Council, the ECB reported in a statement that it will end the debt purchases due to the pandemic at the end of March and that it modifies the schedule of debt purchases from another monetary stimulus program (APP).

The ECB is going to buy debt with this other program in April for a value of 40,000 million euros, in May for a value of 30,000 million euros and in June for 20,000 million euros.

The adjustment of debt purchases for the third quarter will depend on the data and will reflect the evolution of events and prospects, according to the entity.

The ECB will conclude debt purchases in the third quarter if it considers that inflation is not going to weaken in the medium term.

But “if the medium-term inflation outlook changes and financing conditions become inconsistent with progress towards the 2% target”, the ECB is prepared to review the schedule for debt purchases again in volume and/or duration.

Previously, the ECB had decided that monthly debt purchases under the APP program would have an amount of 40,000 million euros in the second quarter of 2022 and 30,000 million euros in the third quarter.

Starting in October, the Governing Council was going to maintain debt purchases at a monthly rate of 20 billion euros.

The ECB has also assured that it will “implement the sanctions that the European Union (EU) and European governments have decided” and is ready to approve any decision that is necessary to fulfill its mandate to maintain price stability and safeguard financial stability.

The ECB has left its interest rates unchanged this Thursday and has assured that it will begin to raise them at some point after it finishes buying debt and in a “gradual”.

The ECB maintains the interest rate of the main financing operations, the weekly auctions, at 0%, of the marginal credit facility, by which it lends the money overnight, at 0.25% and of the deposit facility , for which he remunerates the money at one day, at -0.50%.

Since the deposit facility is negative, the ECB charges banks whose daily reserves exceed a certain amount.

The ECB reiterates that in the first quarter of 2022 it buys debt due to the pandemic at a lower rate than in the previous quarter and that it will end these bond purchases at the end of March 2022.