China News Agency, Berlin, March 12 (Reporter Peng Dawei) The European Central Bank announced on the 12th that it will launch a series of measures including long-term refinancing operations (LTROs), additional quantitative easing of 120 billion euros, etc. Means to deal with the impact of the epidemic on the euro area economy. However, unlike the market's previous expectations, the European Central Bank did not take a rate cut at this meeting.

According to data from the WHO Regional Office for Europe as of 15 March local time, the number of people diagnosed with new coronary pneumonia in Europe (including Russia) has reached 23040, causing a total of 951 deaths.

European Central Bank President Lagarde said on the same day that the spread of the new crown pneumonia epidemic has already had a major impact on the growth prospects of the global and euro area economies, and has also exacerbated market volatility. To this end, the European Central Bank Management Committee decided to launch a package of monetary policy measures to provide liquidity support for households, businesses and banks, improve the financing environment, and help the real economy maintain credit stability.

The interest rate resolution stated that first, the European Central Bank will introduce temporary additional long-term refinancing operations (LTROs) to provide immediate liquidity support for the euro area financial system. This operation will continue until June 2020 to implement targeted long-term refinancing operations ( TLTRO III). Secondly, targeted long-term refinancing operations from June 2020 to June 2021 will apply more favorable interest rates, which is 25 basis points lower than the average interest rate of the main refinancing operations of the euro system. Third, the European Central Bank will implement an additional 120 billion euros in asset purchase plans (ie, quantitative easing, QE) by the end of this year.

The European Central Bank decided on the same day to keep the three benchmark interest rates in the euro area unchanged. The last interest rate cut in the euro area occurred in September 2019 just before the departure of the last European Central Bank President Draghi. Currently the main refinancing rate and overnight loan rate are 0% and 0.25%, respectively, and the overnight deposit rate is negative 0.50%.

Fister, director of the ifo Institute for Economic Research in Munich, Germany, said that the European Central Bank ’s resolution on the day aims to solve the liquidity problems facing banks and SMEs in crisis conditions, and additional quantitative easing measures will also help support the stock market. He analyzed that not adopting a rate cut is also a welcome decision, because under the current negative interest rate environment of the euro zone, the effect of rate cuts is not great. (Finish)