Wednesday, June 23, 2021

Mongolia holds rate, boosts Q3 long-term financing

     Mongolia's central bank kept its policy rate steady for the third time but once again increased the amount of longer-term financing available, saying growth of economic sectors is different, the outlook is uneven and uncertainty is not decreasing due to the domestic spread of the COVID-19 virus.
    The Bank of Mongolia (Mongolbank) left its policy rate steady at 6.0 percent, unchanged since November last year when it was lowered for the fourth time in response to the pandemic.
     In 2020 BM cut its policy rate by a total of 500 basis points from March through November and also lowered banks' reserve requirements, suspended debt-service-to-income ceilings on loans and provided longer-term financing to the banking sector.
     For the third quarter, the central bank said it would increase the amount of long-term financing by 250 billion tughrik, down from 350 billion provided in the second quarter but the same as in the first quarter.
    "The current monetary policy outlook is in line with the inflation target, and further policy adjustments will be made to meet the inflation target in line with economic activity and outlook," Mongolbank said.
     Mongolia's inflation rate rose to 6.2 percent in May from 5.6 percent in April, within the bank's target range of 6.0 percent, plus/minus 2 percentage points.
      Mongolbank said some of the inflation was driven by the economic recovery while most of it was attributed to underlying effects and temporary supply factors.
      "As a result of these factors, inflation will increase in the short term, but will stabilize around the target from 2022," the bank said.


Tuesday, June 22, 2021

Hungary kicks off rate hike cycle to curb inflation

     Hungary's central bank raised its main interest rate for the first time in a decade, living up to its guidance from last month, and said it would "continue the cycle of interest rate hikes until the outlook for inflation stabilizes around the central bank target and inflation risks become evenly balanced."
     The National Bank of Hungary (NBH) raised its base rate by 30 basis points to 0.90 percent, the first change in its policy interest rate since July 2020 when the rate was cut for the second consecutive month as it loosened monetary conditions to support the economy during the COVID-19 pandemic.
     The central bank's other main interest rates, such as the overnight deposit rate and the lending rate were left unchanged at minus 0.05 percent and 1.85 percent, respectively. But NBH said an increase in the one-week deposit rate, which is set at weekly tenders, to the base rate's 0.90 percent was warranted.
    "The (monetary) council has launched a cycle of interest rate hikes to ensure price stability, to prevent inflation risks from having long-lasting effects and to anchor inflation expectations," NBH said, adding the exact need for further tightening would be assessed each month.
     In parallel with an increase in interest rates, the central bank is also phasing out some of the monetary tools used during the COVID crises and closing its Funding for Growth Go! scheme. The program was launched in April last year to support financing for small and medium-sized businesses and helped more than 38,000 firms.
      For the time being, NBH will continue its purchases of government securities, saying it considers this be a crucial part of its monetary policy instruments that has been successful in maintaining liquidity in the bond markets and helped improve the effectiveness of policy transmission. 
     It will be flexible in changing the quantity of its weekly bond purchases but added it will continue to use the program "by maintaining a lasting presence in the market."
     Similar to last week's announcement by the Bank of Japan, Hungary's central bank said it would be introducing instruments to support environmental sustainability, with details to follow later.
     Today's rate cut reverses a decade-long monetary easing cycle in Hungary and the central bank is also the 15th central bank to raise rates this year, following in the footsteps of such nations as Russia, Brazil, Turkey, Ukraine, and Iceland that are responding to rising inflationary pressures.
     The last time NBH raised its rate was in December 2011 when the rate was raised to 7.0 percent.
     Six months later, in August 2012, NBH embarked on a four-year easing cycle that ended in May 2016 after the rate had been cut by a total of 6.10 percentage points to 0.90 percent.
      Between May 2016 and June 2020, NBH kept the rate steady, but with economic activity grinding to a halt during the pandemic, NBH's first move was to ensure liquidity in the country's financial markets and then it began purchasing government securities in May 2020.
     The following month, in June, the base rate was then cut 15 basis points and in July a second cut of 15 points followed.
      Apart from a hike to the one-week deposit rate in September last year to prevent a rise in inflationary risks, Hungary's central bank has been focused on ensuring a economic recovery from the pandemic and taking a wait-and-see approach to the bounce back in inflation in recent months.
     But with a successful roll-out of vaccines and a lifting of COVID-restrictions, economic activity in Hungary has bounced back and last month the central bank changed tack, saying it was now ready to tighten monetary conditions to ensure price stability and curb inflationary risks.
     Hungary's inflation rate jumped to 5.1 percent in April from a low of 2.7 percent in January and remained at 5.1 percent in May, the highest since November 2012, and well above the bank's target of 3.0 percent, plus/minus 1 percentage point.
    "Upside risks to the outlook for inflation have generally increased, " the bank said, adding commodity prices have been rising along with freight costs and the rapid recovery in demand will give producers an opportunity to pass on higher costs to consumer prices.
     The central bank expects economic output to recover to pre-COVID levels in the third quarter of this year and while the recovery of industry will be followed by retail, a recovery of the services sector will take longer.
    But the high rate of investment is expected to continue and exports to improve "markedly" this year as external markets recover while household demand picks up.
     The central bank raised its forecast for economic growth this year to 6.2 percent, up from the March forecast of 4-6 percent, and forecast growth of 5.5 percent next year and 3.5 percent in 2023.
     "Global relation and persistent rises in commodity prices as well as potential second-round effects arising during the restart of the economy pose the greatest risks to the outlook for inflation," NBH said.
     The central bank raised its forecast for inflation to average 4.1 percent this year, up from its March forecast of a 3.8-3.9 percent range. After spiking in the second quarter, inflation is expected to ease to around 4 percent during the summer months and then rise again at the end of the year.
     In early 2022 inflation is then expected to decline into the bank's tolerance range and then stabilize around the target from mid-2022.
     Hungary's forint, which was hit by the U.S. dollar's rise after the subtle, but substantial, change in the outlook for the Fed's policy last week, rose immediately.
     The forint jumped 1.2 percent to 352.0 against the euro and is now up 3.6 percent this year. Against the U.S. dollar, the forint jumped 1.4 percent to be up 0.3 percent this year.

Sunday, June 20, 2021

This week in monetary policy: China, Paraguay, Hungary, Morocco, Honduras, Thailand, Georgia, Czech Rep., Guatemala, Philippines, UK, Mexico, Zimbabwe & Trinidad and Tobago

    This week - June 20 through June 26 - central banks from 14 countries or jurisdictions are scheduled to decide on monetary policy: China, Paraguay, Hungary, Morocco, Honduras, Thailand, Georgia, Czech Republic, Guatemala, Philippines, United Kingdom, Mexico, Zimbabwe and Trinidad & Tobago.
     Following table includes the name of the country, the date of the next policy decision, the current policy rate, the local time a policy decision is announced, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.
    The table is updated when the latest decisions are announced and can always be accessed by clicking on This Week.

JUN 20- JUN 26, 2021
CHINA20-Jun3.85%9:30003.85%         EM
HUNGARY22-Jun0.60%000.75%         EM
MOROCCO22-Jun1.50%001.50%         FM
THAILAND23-Jun0.50%000.50%         EM
CZECH REPUBLIC23-Jun0.25%14:30000.25%         EM
PHILIPPINES24-Jun2.00%002.25%         EM
UNITED KINGDOM24-Jun0.10%12:00000.10%         DM
MEXICO24-Jun4.00%13:000-255.00%         EM
TRINIDAD & TOBAGO25-Jun3.50%003.50%

Thursday, June 17, 2021

Norway keeps rate, says rate likely to be hiked in Sept.

     Norway's central bank left its monetary policy rate steady, as expected, but said it would most likely raise the rate September - the first rate hike in two years - as economic activity has bounced back faster than expected after the negative impact of COVID-19 last year.
     Norges Bank (NB), which slashed its policy rate three times last year by a total of 1.50 percentage points to 0.0 percent, kept the rate at a rock-bottom level as there is still uncertainty about the pandemic and the overall outlook and balance of risk imply a continued expansionary monetary policy stance.
     "There is still uncertainty regarding the evolution of the pandemic, but economic activity now seems to be rebounding sharply and somewhat faster than projected earlier," NB said, with its governor, Oeystein Olsen, adding the policy rate "will most likely be raised in September."
      The bank's monetary policy committee is scheduled to meet on Aug. 19 and then on Sept. 23, when it updates its monetary policy report, which is issued four times a year.
     Encouraged by the recovery of economic activity, NB has been steadily pulling forward its first rate hike after the three rate cuts last year.
     In December last year, for example, the central bank pencilled in the first hike in the first half of 2022 but then in March the rate hike rate was pulled forward to the second half of 2021. 
     In April, when the bank's monetary and financial stability committee previously met, it also said the rate would most likely be raised in the latter half of 2021, and today narrowed down the date to September.
     After economic activity in Norway came to a halt in March and April last year when the pandemic swept the globe, activity picked up in following months until the recovery once again stalled in the autumn and in the first months of this year when infection rates rose again.
     But with infection rates declining and the pace of vaccinations picking up, Covid-restrictions are being lifted, with the reopening boosting economic activity as household consumption jumps, helped by accumulated savings, and investments also pick up, including in the oil-related industry.
     Although underlining inflation is below the bank's 2.0 percent target, NB said higher global inflation and inflation expectations are creating uncertainty about inflation ahead and continued low interest rates increase the risk of a build-up of financial imbalances, such as the marked rise in house prices.
     Norway's headline inflation rate has eased in the last three months to 2.7 percent in May from 3.3 percent in February with core inflation falling to 1.5 percent in May from a recent high of 3.7 percent in August last year.
     Helped by the rise in the krone's exchange rate since 2020 and prospects for moderate wage growth, NB expects inflation to remain below its target in coming years, forecasting headline inflation of 2.8 percent  this year, unchanged from March, then 1.1 percent in 2020, also unchanged, and 1.3 percent in 2023, down from 1.5 percent.
      After Norway's gross domestic product bounced back in the third quarter of 2020, with quarterly growth of 4.3 percent, the growth rate slipped to 0.8 percent in the fourth quarter and minus 0.6 percent in the first quarter of this year for an annual contraction of 1.4 percent.
      In 2020 mainland GDP shrank 3.1 percent but is forecast to grow 3.8 percent this year, unchanged from March, and then 3.6 percent in 2022, up from 3.4 percent, and 1.2 percent in 2023, unchanged.
     Although the policy rate is still seen averaging 0.1 percent this year, the rate is seen rising to 0.8 percent in 2022, up sharply from the March forecast of 0.3 percent, and implying 3 rate hikes of 25 basis points.
     In 2023 the rate is seen averaging 1.3 percent, implying another 2 hikes.
     Norway's krone has been strengthening steadily since November last year though it took a hit in recent days, as most other currencies, as the U.S. dollar rose after the U.S. Federal Reserve pulled forward its forecast for raising rates to 2023 from 2024.
     The krone was trading at 8.5 to the dollar today, down 2.2 percent since the start of June, but unchanged on the year.

Wednesday, June 16, 2021

Brazil raises rate 3rd time, sees same hike in August

     Brazil's central bank raised its key interest rate for the third time this year - as expected - and said it expects to continue normalizing its monetary policy stance with another rate hike of the same magnitude at its next policy meeting in August to ensure inflation slows to its target by 2022.
     The Central Bank of Brazil (BCB) raised its benchmark Selic rate by another 75 basis points to 4.25 percent and has now raised it by 2.25 percentage points since it began tightening its policy stance in March this year with a 75-point hike and followed this with a similar-sized hike in May.
      Although the bank's policy committee, Copom, said it expects to raise the Selic rate by another 75-points on Aug. 4, it warned that a deterioration in inflation expectations "may require a quicker reduction of the monetary stimulus," adding it's view would depend on economic activity, the balance of risks and how these affect inflation projections.
      Inflation in Brazil has been rising steadily since May last year and rose to a higher-than-expected 8.06 percent in May, the highest since September 2016, with drought and higher commodity prices adding to the upward pressure from improving demand.
     The central bank targets inflation of 3.75 percent this year, plus/minus 1.5 percentage points, and a midpoint target of 3.50 percent in 2022, within the same range.
     Copom noted inflation expectations for 2021 in the weekly FOCUS survey now stand at 5.8 percent, then 3.8 percent for 2022 and 3.25 percent for 2023. 
     Copom's own projections assume a Selic rate that ends this year at 6.25 percent and then 6.50 percent in 2022.
     Looking to Brazil's economy, the bank said recent indicators continue to be better than expected despite the intensity of the second wave of the COVID-19 pandemic and the risks to the recovery have lessened.

Fed holds policy but pulls forward rate hikes to 2023

     The U.S. central bank left its key interest rates steady along with its level of asset purchases but pulled forward its forecast for raising rates to 2023 from 2024, reflecting the economic recovery and better jobs market from a successful roll-out of vaccines to combat the COVID-19 virus and strong policy support.
      The Federal Reserve (Fed) left its target range for the federal funds rate at 0.0 to 0.25 percent, unchanged since two, rapid-fire rate cuts totaling 1.50 percentage points in March last year at the height of the pandemic.
      In its statement, the Fed's policy-making body, the Federal Open Market Committee (FOMC), unanimously acknowledged the improved growth prospects for the U.S. and raised its forecast for growth this year to 7.0 percent from the March forecast of 6.5 percent.
     Nevertheless, it added there are still risks to the outlook and those sectors of the economy most adversely affected by the pandemic remain weak even if they are improving.
     In 2022 the U.S. economy is seen expanding 3.3 percent, unchanged from the previous forecast, and in 2023 by 2.4 percent, up from 2.2 percent. The unemployment rate is seen steadily falling from 4.5 percent this year to 3.8 percent in 2022 and 3.5 percent in 2023.
     The Fed maintained its guidance for the fed funds rate to remain at the current level until the labour market reaches maximum employment and inflation is on track to reach 2 percent and moderately exceed that for some time.
      It also confirmed its commitment to continue to boost holdings of Treasuries and agency mortgage-backed securities by a total of $120 billion a month until further progress has been made on its goals, with no reference to when it may begin to discuss a tapering of its asset purchases.
     In his press conference, however, Fed Chair Jerome Powell said FOMC members were starting to turn their attention to scaling back bond purchasing, describing it as a "talking-about-talking-about meeting."
      The Fed acknowledged rising inflation by raising its forecast for its preferred gauge - the core personal consumption expenditures (PCE) - in its latest projection to 3.0 percent this year from the March forecast of 2.2 percent.
      Inflation in the U.S., and worldwide, has been rising in recent months as economies bounce back faster than expected from the pandemic, unleashing pent-up demand and pushing up a wide range of prices, especially food, metals and commodity prices.
     In April, core PCE in the U.S. rose to 3.1 percent, the highest annual rate since July 1992.
     Although the FOMC projects core PCE will ease to 2.1 percent in 2022 and remain at this level in 2023 - just over its 2.0 percent target - the forecast for the federal funds rate was raised sharply to 0.6 percent from the March forecast of 0.1 percent.
      The Fed's so-called dot plot, which shows the rate forecast for individual FOMC members and regional Fed presidents, showed 7 of 18 members now look to raise rates in 2022, up from 4 in March.
      But in 2023 a clear majority of 13 of the 18 FOMC members expect the rate to rise, up from only 7 in March, with the level of the fed funds rate in the dot plot indicating multiple rate hikes.

Uganda cuts rate to boost fragile growth as virus rises

    Uganda's central bank cut its benchmark interest rate for the fourth time in the current monetary easing cycle, saying the economic recovery still requires monetary policy support and inflation will likely remain below the target in the near term with little space for fiscal policy to respond to "fragile economic growth."
    The Bank of Uganda (BOU) cut its central bank rate (CBR) by 50 basis points to 6.50 percent and has now cut the rate by a total of 3.50 percentage points since October 2019 when it began easing its policy stance in response to decelerating inflation and slowing global economic growth.
     In response to the COVID-19 pandemic, the central bank cut its rate twice in 2020 - in April and June - and while the rate has been maintained for the last 12 months, BOU in February this year extended its credit relief measures and liquidity assistance to financial institutions as the economic recovery had lost momentum due to a surge in infection rates.
     In its previous statement from April, the bank's monetary policy committee said there were still enough uncertainties and risks to the economy to warrant keeping the accommodative policy stance and since then Uganda has experienced a rise in COVID-19 cases and a shortage of vaccines and oxygen.
     The World Health Organization (WHO) last week warned of a third wave of the pandemic across Africa, with eight countries, including Uganda, seeing more than a 30 percent jump in cases in a week.
     "The MPC (monetary policy committee) assessed that the risks to the economic growth outlook are still on the downside, there remains considerable excess capacity in the economy, sectoral unevenness of economic recovery, and a weak level of business investment," BOU said.
     Although economic developments have been broadly in line with the central bank's outlook in April - growth in the 2020/21 financial year is projected to be 3.3 percent, above initial projections of 3.1 percent and up from a 1.1 percent contraction last year - private sector investment is still contracting and domestic demand could still be dented by the emerging COVID-19 wave.
      But BOU still expects the economic recovery to strengthen as vaccines are rolled out amid improving global growth and left its forecast for gross domestic product growth in the 2021/22 fiscal year, which begins July 1, unchanged at 4.0-4.5 percent.
      As several other African countries, including Zambia, Uganda is facing pressure from an estimated 35 percent rise in public debt last year to about 50 percent of GDP due to from tax revenue shortfalls and the cost of measures to combat the virus.
      Earlier this month staff from the International Monetary Fund (IMF) reached agreement with the country's authorities on a $1 billion package to help tackle the financing needs in coming years.
      Inflation in Uganda has been decelerating this year and after reweighing the consumer price index basket inflation fell to 1.9 percent in May from 2.1 percent.
      BOU expects inflation to remain below its 5.0 percent target in the near term as excess capacity continues to put downward pressure on prices, but is forecast to stabilize around the target by the end of 2022.
      On April 1 Uganda's parliament reappointed the bank's governor, Emmanuel Tumusiime-Mutebile, for another five-year term. Having initially been appointed in 2001, Mutebile, 71, is one of the longest-serving central bank governors in the world.


Tuesday, June 15, 2021

Armenia raises rate 4th time, will consider further hikes

     Armenia's central bank raised its key interest rate for the fourth time in seven months and said it would consider tightening monetary conditions further in the near future to neutralize the risk of accelerating inflation expectations in parallel with the increase in domestic demand.
     The Central Bank of Armenia (CBA) raised its refinancing rate by another 50 basis points to 6.50 percent and has now raised it 225 points following four rate hikes starting in December 2020.
      In response to the COVID-19 pandemic, CBA cut its rate four times between March and September last year by a total of 125 basis points and has now more than fully unwound those cuts.
     The key interest rate is now back to the level seen in November 2016 when CBA was in the midst of an easing campaign that began in August 2015 when the rate was lowered from 10.50 percent and concluded in February 2017 with a rate of 6.0 percent.
     Armenia's inflation rate eased to 5.9 percent in May from 6.2 percent in April but CBA said the 12-month normal inflation rate continued to accelerate to 7.4 percent at the end of May and it expects inflation to remain high before gradually falling and stabilizing around its 4.0 percent target.
      Armenia's consumer prices are being pushed upwards on two fronts; from external sources and on the domestic side.
      "Taking into account the inflationary effects expected from the external sector on the country's economy, the CBA board considers it expedient to increase the policy interest rate," the bank said, adding it still consider the risks of inflation deviating from its projected trend to be balanced given the still uncertain economic prospects.
     In the second quarter Armenia's main trading partners saw a faster-than-expected recovery of demand than expected due to the positive impact of vaccines and stimulus and this is resulting in a high inflation in global commodity markets due to limited supply.
     CBA expects inflation in its partner countries to exceed its previous estimates and thus have a significant inflationary impact on its own economy.
     At the same time, positive developments in industry and services is pointing to a faster-than-expected recovery of Armenia's economy, with demand recovering on the back of the rapid growth in global demand, increased remittances and high growth in consumption amid continued weak investment.
      The rise in consumption is helped by growing lending along with the spending of previously accumulated savings, reflecting the fact that inflationary expectations have risen, CBA said, adding it also expects inflationary effects from growing demand for production capacities.


Sunday, June 13, 2021

This week in monetary policy: Armenia, Uganda, Namibia, USA, Brazil, Costa Rica, Indonesia, Taiwan, Norway, Switzerland, Ukraine, Turkey, Botswana, Egypt, Japan, Azerbaijan & China

    This week - June 14 through June 20 - central banks from 17 countries or jurisdictions are scheduled to decide on monetary policy: Armenia, Uganda, Namibia, USA, Brazil, Costa Rica, Indonesia, Taiwan, Norway, Switzerland, Ukraine, Turkey, Botswana, Egypt, Japan, Azerbaijan and China.
     Following table includes the name of the country, the date of the next policy decision, the current policy rate, the local time a policy decision is announced, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.
    The table is updated when the latest decisions are announced and can always be accessed by clicking on This Week.

JUN 14- JUN 20, 2021
UNITED STATES16-Jun0.25%14:00000.25%         DM
BRAZIL16-Jun3.50%18:30751502.25%         EM
COSTA RICA16-Jun0.75%000.75%
INDONESIA17-Jun3.50%0:000-254.25%         EM
TAIWAN17-Jun1.125%001.125%         EM
NORWAY17-Jun0.00%10.00000.00%         DM
SWITZERLAND17-Jun-0.75%9:3000-0.75%         DM
UKRAINE17-Jun7.50%14:001001507.00%         FM
TURKEY17-Jun19.00%14:0002008.25%         EM
EGYPT17-Jun8.25%009.25%         EM
JAPAN18-Jun-0.10%00-0.10%         DM
CHINA20-Jun3.85%9:30003.85%         EM

Friday, June 11, 2021

Russia hikes rate 3rd time and sees further hikes

      Russia's central bank raised its key interest rate for the third time, as expected, and said rising inflationary pressures amid a faster-than-expected economic recovery from the COVID-19 pandemic could lead to a more substantial and prolonged deviation of inflation from its target, creating "the necessity of further increases in the key rate at upcoming meetings."
     The Bank of Russia raised its key rate by another 50 basis points to 5.50 percent and has now raised it by 125 basis points this year following hikes in April and March when the rate was raised for the first time since December 2018 to curb inflationary pressures.
     "The balance of risks has significantly shifted towards pro-inflationary ones," the bank's board said.
     Today's rate hike was expected by financial markets following the central bank's guidance in April and both the ruble and Russian stocks rose. 
     Economists had initially pencilled in a rate hike of only 25 basis points today following the bank's statement in April but ratcheted up their forecasts after inflation in May topped expectations and hit 6.0 percent - the highest since October 2016 - well in excess of the bank's 4.0 percent target.
     As of June 7, the central bank estimates inflation had risen further to 6.15 percent, reflecting the fact that steady growth in domestic demand is exceeding the expansion of supply in a wide range of sectors.
     "As far as monetary policy prospects are concerned, we are prepared to step up actions to bring inflation back to target," the bank's governor, Elvira Nabiullina, said.
      The scope and pace of future rate hikes would be based on the level of sustained inflationary pressure, inflation expectations and the forecast of demand and supply, she said, adding rate hikes should ensure annual inflation returns to near 4.0% target in the second half of 2022.
      With an eye toward the current debate over whether the spike in inflation is transitory or not - and thus whether rate hikes are necessary - Nabiullina said it did not seem correct to attribute rising prices purely to transitory supply-side factors, and specifically, global price movements.
       When prices began rising in the fourth quarter of last year, economists blamed supply-side constraints and there were doubts over the strength of demand as the pandemic was still raging.
       Fears that pro-inflationary factors could transform into sustainable inflation pressure were largely pushed aside, but Nabiullina said it is now becoming clear the pro-inflationary impact of demand is prevailing, with the expansion in demand by far exceeding the impact of supply-side factors.
      With both the Russian and global economies recovering faster than expected, she said the need for unprecedented accommodative policies in advanced economies is no longer needed so an earlier monetary normalization is possible.
      "This may become a further driver of volatility growth in global financial markets," the bank warned.
      With economic activity bouncing back faster than expected, the economy will return to its pre-crises level in the current quarter. 
       Excluding oil production and the travel industry, the bank said output in most industries have not only bounced back to end-2019 level but also outstripped it, adding it is typical that growth in demand outstrips supply in such cases as companies need time to add capacity, hire and train staff.

Thursday, June 10, 2021

ECB to continue with higher pace asset purchases in Q3

     The European Central Bank (ECB) left its key interest rates steady, as widely expected, but said it would continue to purchase assets under its pandemic emergency purchase program (PEPP) "at a significantly higher pace" in the third quarter of this year than in the first months.
      In March the ECB - the central bank for the 19 countries that share the euro currency - sped up its asset purchases under PEPP during the second quarter of this year to ensure long-term government bond yields remained low and will now continue with this pace in the quarter from July through September.
     In its statement, the ECB's governing council said the decision to conduct purchases at a significantly higher pace "over the coming quarter" was "based on a joint assessment of financing conditions and the inflation outlook."
     The ECB's President, Christine Lagarde, will hold a news conference later today to comment on the decision.
     Apart from commenting on its pace of asset purchases in the coming quarter, the ECB reiterated its statement from April, including that PEPP's total purchase amount of 1.850 billion euros will be maintained and purchases will continue to at least the end of March 2022 or until the coronavirus crises is over.
     PEPP was originally set up in March last year - at the height of the COVID-19 crises - with a size of 750 billion but in June the program was expanded by 600 billion and then in December it was expanded for the second time by 500 billion and its life extended.
     The ECB left its key interest steady, including the benchmark refinancing rate at 0.0 percent, the marginal lending rate at 0.25 percent and the deposit rate at minus 0.50 percent. The refi and lending rates have been kept steady since March 2016 and the deposit rate since September 2019.