European Central Bank holds steady on $2.25 trillion bond-buying package after stepping up stimulus in December

ECB boss Christine Lagarde has seen the central bank through the coronavirus crisis

Ralph Orlowski/Reuters

• The European Central Bank announced it would keep interest rates at record lows and bond-buying at €1.85 trillion ($2.25 trillion).
• The ECB said it had "decided to reconfirm its very accommodative monetary policy stance".
• It comes after it boosted bond-buying by €500 billion in December to support the Eurozone.
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The European Central Bank has held interest rates at their record-low level and kept bond-buying steady, taking a breather after increasing support to the coronavirus-ravaged Eurozone economy in December.

The ECB's governing council kept its main deposit rate at minus 0.5%, meaning banks are charged to keep money with the central bank, encouraging them to lend it out.

After increasing support last month, the ECB kept its main bond-buying scheme - the pandemic emergency purchase programme (PEPP) - at €1.85 trillion ($2.25 trillion).

The governing council also pledged that it will continue to "provide ample liquidity" through a series of ultra-cheap loans to banks known as TLTROs.

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Analysts expected the ECB to hold fire at its January meeting after it ramped up its bond-buying programme by €500bn in December. It also pushed back the end of the PEPP until at least March 2022 at the last meeting.

In Thursday's announcement the ECB said: "If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the PEPP, the envelope need not be used in full." 

The euro was up 0.39% against the dollar in the wake of the decision, to $1.216.

Coronavirus cases have surged across Europe since the autumn, forcing countries to lock down their economies once again.

Coronavirus vaccines offer the hope of a return to normality this year, which has driven stock markets higher. Yet business and households face a bleak few months as the virus is brought under control.

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Germany on Tuesday extended its lockdown until the middle of February and introduced stricter rules.

The ECB stressed that its "monetary policy stance" is "very accommodative". Investors will now turn their attention to ECB chief Christine Lagarde's press conference.

"No change from the ECB is no surprise," said Neil Birrell, chief investment officer at Premier Miton Investors.

"Confirmation of the pandemic purchase programme and maintaining the stimulus after the December boost is good news. It also looks like they don't view the extension of the lockdown as having such a negative effect that they need to step things up."

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