ECB fully prepared to expand PEPP in June

Accounts of April 29-30 ECB monetary policy meeting indicated that it’s ready to expanding easing measures in the upcoming June meeting. The Governing Council was “fully prepared to increase the size of the PEPP and adjust its composition, and potentially its other instruments, if, in the light of information that became available before its June meeting, it judged that the scale of the stimulus was falling short of what was needed.”

The minutes also said that it’s Eurozone economy was “heading towards a decline in activity that was unprecedented in recent history.” June’s Eurosystem staff economic projections would be “revised down significantly” compared with March ECB staff projections. Present situations was also “characterised by Knightian or ‘radical’ uncertainty, implying unquantifiable risks.”

Also, it’s generally considered that, of the three coronavirus scenarios, the “mild” scenario was probably already too optimistic. But it’s “too early” to conclude that the “severe” scenario” was the “most likely. Still a “swift V-shaped recovery could probably already be ruled out at this stage.”

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Full minutes here.