Novel coronavirus (COVID-19) cases began to plateau in the largest economies of Europe and quarantine measures implemented by public authorities began to be lifted gradually following the slowdown in production. Hence, economies started to be reopened and the investor confidence, which had been fragile for a long time, started to increase. However, many questions on how to repair the devastating damage the pandemic caused on the most important building blocks of economies remain unanswered.

In the first and second quarter of 2020, economic activities in Eurozone, especially in Germany, France, and Italy were at minimum level and thus, governments and European Central Bank took action. In addition to financial incentives of governments in the name of minimizing economic damage, European Central Bank’s maintained current policy interest rate at 0 percent, removed the limits of additional emergency purchase programme worth 750 billion euro, and then, announced a new series of seven additional longer-term refinancing operations. European Central Bank President Christine Lagarde said coronavirus measures were suppressing economies and the pace of recovery was uncertain, adding that economic contraction in Eurozone this year would range from 5 to 12 percent. Lagarde noted that they loosened the asset purchase requirements to facilitate banks provide more loans, and added that they are ready for any changes in the pandemic purchase program, and the measures taken by the Committee will support liquidity conditions, and they will use all tools they have when needed.

Will ECB’s Unlimited Monetary Expansion Further Continue?

Monetary policy accounts of the meeting held in April 30 will be published today at 13:30 (GMT+2). Accounts will include reasons for the Committee to maintain its policy interest rate at 0 percent, despite the negative interest rate expectations frequently brought to the agenda in the markets.  In addition, the markets will look for clues on Committee’s predictions for pandemic purchase program initiated in addition to its current asset purchase program and more significantly, they will look for an answer to the question of ‘how long will this additional programs go?’ In addition, additional steps to support the recovery of Eurozone economy, which shrank in the first quarter of 2020, and the approach of committee members on this issue will answer the questions of market participants.


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