Luck be a lady

4 June 2020 By Swaha Pattanaik Follow @swahapattanaik

The ECB boss will buy more assets and for longer than initially planned. She is as decisive as her predecessor, Mario Draghi, but luckier. Politicians are splurging to revive economies. Growth will recover faster because fiscal and monetary policies are pulling the same way.

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The European Central Bank on June 4 said it would increase the total amount of bonds it buys under its Pandemic Emergency Purchase Programme, or PEPP, by 600 billion euros to a total of 1.35 trillion euros.

The duration of the programme will be extended to at least the end of June 2021, the central bank said. It added that maturing principal payments from securities bought under the PEPP would be reinvested until at least the end of 2022.

Most euro zone government bond yields fell after the ECB announcement. The yield on Italy’s 10-year government bond declined more than 15 basis points to 1.39% while the premium such debt offers over comparable German bonds shrank to 175 basis points from 190 basis points earlier on June 4.

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