Policymakers at the ECB have already flagged that they will extend their support for the economy at their monetary policy meeting next Thursday, primarily by “recalibrating” the Pandemic Emergency Purchase Programme (PEPP) and the Targeted Longer-term Refinancing Operations (TLTROs). Our best guess is that this will include a twelve-month extension to the PEPP and an increase in its size to a maximum of €2 trillion. The Bank is also likely to schedule more TLTROs on more generous terms. The key message will be that the ECB is committed to administering its medicine for a long time, even as the economy gets back to health.
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