ECB to reassure on cheap money as virus woes persist

FRANKFURT: Christine Lagarde is expected to stress the European Central Bank's commitment to cheap money on Thursday as Europe's biggest economies battle a surge in coronavirus infections that could slow the eurozone recovery.

After calming jittery markets last month by promising to "significantly" step up the pace of its pandemic emergency bond purchases, analysts say the ECB's 25-member governing council is under no pressure to take fresh action.

Instead, president Lagarde is likely to use her 2:30 pm (1230 GMT) press conference to reiterate the message that there will be no premature end to "favourable financing conditions" until the crisis is deemed over and the rebound is firmly on track.

The Frankfurt institution is widely predicted to hold interest rates at historic lows, including a deposit rate of minus 0.5 percent -- meaning banks pay to store excess cash with the ECB.

No tweaks are expected either to the ECB's 1.85 trillion euro ($2.2 trillion) pandemic emergency bond purchasing programme (PEPP), set to run until March 2022.

"The ECB press conference might well be reassuringly boring this time," said Berenberg bank economist Holger Schmieding.

The goal of the ECB's measures, which also include super cheap loans for banks, is to keep borrowing costs low to encourage spending and investment in the 19-nation currency club in order to drive up growth and inflation.

Lagarde may also repeat her plea for eurozone governments to share the load through fiscal stimulus.

Those efforts were given a boost when a top German court on Wednesday threw out a legal challenge against the European Union's 750-billion-euro recovery fund, paving the way for its ratification.

Lagarde has frequently called for the landmark fund to be implemented, saying it has a "key role" to play in nursing the region back to health.