While the ECB’s rate-cut announcement at 12:45 BST didn’t contain any surprises (a 25bp cut to the core refi rate), comments being made at a 1:30 BST press conference by Jean-Claude Trichet do:
13:39:51 DI !! *DJ Trichet: ECB To Launch Additional Repo Operations
13:39:53 DI !! *DJ Trichet: New ECB Repo Ops With 12-Mo Maturities
13:40:26 DI !! *DJ Trichet: New ECB Repo Ops Under Full Allotment, Fixed-Rate
13:40:39 DI !! *DJ Trichet: ECB To Launch Quantitative Easing
13:40:41 DI !! *DJ Trichet: Purchase Of Covered Bonds
13:40:47 DI !! *DJ Trichet: European Investment Bank To Become Counterparty
13:40:50 DI !! *DJ Trichet: Eligible Counterparty From July 8
The ECB’s commitment to buying covered bonds is “in principle” at this stage. Further details of “unconventional policy” measures are not going to be disclosed by the central bank until June.
Here’s the key excerpt from Trichet’s actual remarks (emphasis ours):
Current key ECB interest rates are appropriate taking into account all available information and analysis. In addition to the reductions in interest rates, the Governing Council decided today to proceed with its enhanced credit support approach. In continuity and consistency with the operations we have undertaken since October 2008, and in recognition of the central role played by the banking system in financing the euro area economy, we will conduct liquidity-providing longer-term refinancing operations with a maturity of 12 months. The operations will be conducted as fixed rate tender procedures with full allotment. The rate for the first of these operations, to be announced on 23 June 2009, will be the rate on the main refinancing operations at that time. Subsequently, the fixed rate may include a premium to the rate on the main refinancing operations, depending on the circumstances at the time.
The Governing Council has decided in principle that the Eurosystem will purchase euro-denominated covered bonds issued in the euro area. The detailed modalities will be announced after the Governing Council meeting of 4 June 2009.
Furthermore, the Governing Council has decided that the European Investment Bank will become an eligible counterparty in the Eurosystem’s monetary policy operations with effect from 8 July 2009 and under the same conditions as any other counterparty.
